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) -- MHI Hospitality Corporation (Nasdaq: MDH) 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, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins.
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- Powered by its strong earnings growth of 153.84% and other important driving factors, this stock has surged by 53.55% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.
- 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 157.1% when compared to the same quarter one year prior, rising from -$2.56 million to $1.46 million.
- MHI HOSPITALITY CORP 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. During the past fiscal year, MHI HOSPITALITY CORP continued to lose money by earning -$0.40 versus -$0.49 in the prior year.
- The gross profit margin for MHI HOSPITALITY CORP is currently extremely low, coming in at 11.00%. Regardless of MDH's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, MDH's net profit margin of 7.07% is significantly lower than the industry average.
- 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, MHI HOSPITALITY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff