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) -- FelCor Lodging (NYSE: FCH) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth and good cash flow from operations. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.
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- Compared to its closing price of one year ago, FCH's share price has jumped by 45.27%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- Despite its growing revenue, the company underperformed as compared with the industry average of 15.9%. Since the same quarter one year prior, revenues slightly increased by 6.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- FELCOR LODGING TRUST INC's earnings per share declined by 19.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FELCOR LODGING TRUST INC continued to lose money by earning -$1.53 versus -$2.40 in the prior year. This year, the market expects an improvement in earnings (-$0.75 versus -$1.53).
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, FELCOR LODGING TRUST INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for FELCOR LODGING TRUST INC is currently extremely low, coming in at 5.60%. Regardless of FCH's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, FCH's net profit margin of -8.00% significantly underperformed when compared to the industry average.
-- Written by a member of TheStreet Ratings Staff