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) -- PS Business Parks (NYSE: PSB) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.
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- Despite its growing revenue, the company underperformed as compared with the industry average of 14.7%. Since the same quarter one year prior, revenues rose by 13.8%. 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.
- Net operating cash flow has remained constant at $51.00 million with no significant change when compared to the same quarter last year. Even though PS BUSINESS PARKS's cash flow growth was minimal, the firm managed to surpass its industry's average growth rate of -52.76%.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, PS BUSINESS PARKS underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The gross profit margin for PS BUSINESS PARKS is currently lower than what is desirable, coming in at 33.00%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 25.38% trails that of the industry average.
-- Written by a member of TheStreet Ratings Staff