Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. NEW YORK ( TheStreet) -- UDR (NYSE: UDR) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its poor profit margins and generally disappointing historical performance in the stock itself.
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- The gross profit margin for UDR INC is currently extremely low, coming in at 11.50%. Regardless of UDR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, UDR's net profit margin of -4.90% significantly underperformed when compared to the industry average.
- In its most recent trading session, UDR has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, UDR INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has increased to $97.31 million or 43.43% when compared to the same quarter last year. In addition, UDR INC has also vastly surpassed the industry average cash flow growth rate of -19.71%.
- UDR INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, UDR INC continued to lose money by earning -$0.65 versus -$0.72 in the prior year. This year, the market expects an improvement in earnings ($0.91 versus -$0.65).
-- Written by a member of TheStreet Ratings Staff