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) -- Essex Property (NYSE: ESS) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, expanding profit margins, impressive record of earnings per share growth and increase in stock price during the past year. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
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- The revenue growth came in higher than the industry average of 16.6%. Since the same quarter one year prior, revenues rose by 38.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 195.1% when compared to the same quarter one year prior, rising from $15.30 million to $45.16 million.
- 44.80% is the gross profit margin for ESSEX PROPERTY TRUST which we consider to be strong. It has increased significantly from the same period last year. Along with this, the net profit margin of 25.01% is above that of the industry average.
- ESSEX PROPERTY TRUST 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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ESSEX PROPERTY TRUST increased its bottom line by earning $3.13 versus $0.99 in the prior year. For the next year, the market is expecting a contraction of 17.7% in earnings ($2.58 versus $3.13).
- In its most recent trading session, ESS 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. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
-- Written by a member of TheStreet Ratings Staff