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) -- Education Realty (NYSE: EDR) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, robust revenue growth, growth in earnings per share, compelling growth in net income and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins.
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- Compared to where it was trading one year ago, EDR is up 4.33% to its most recent closing price of 11.07. Looking ahead, although the push and pull of a bull or bear market could certainly alter the outcome, our view is that this stock's positive fundamentals give it good potential for further appreciation.
- The revenue growth came in higher than the industry average of 14.7%. Since the same quarter one year prior, revenues rose by 32.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- EDUCATION REALTY TRUST 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 two years. We feel that this trend should continue. During the past fiscal year, EDUCATION REALTY TRUST INC turned its bottom line around by earning $0.00 versus -$0.08 in the prior year. This year, the market expects an increase in earnings to $0.12 from $0.00.
- 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 182.8% when compared to the same quarter one year prior, rising from -$5.78 million to $4.79 million.
- 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 on the basis of return on equity, EDUCATION REALTY TRUST INC underperformed against that of the industry average and is significantly less than that of the S&P 500.