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) -- CoreSite Realty (NYSE: COR) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.
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- COR's revenue growth has slightly outpaced the industry average of 16.4%. Since the same quarter one year prior, revenues rose by 20.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- CORESITE REALTY 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, CORESITE REALTY CORP turned its bottom line around by earning $0.22 versus -$0.23 in the prior year. This year, the market expects an improvement in earnings ($0.28 versus $0.22).
- Net operating cash flow has increased to $20.87 million or 33.92% when compared to the same quarter last year. Despite an increase in cash flow, CORESITE REALTY CORP's average is still marginally south of the industry average growth rate of 39.12%.
- 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, CORESITE REALTY CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The gross profit margin for CORESITE REALTY CORP is rather low; currently it is at 17.40%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, COR's net profit margin of 4.16% is significantly lower than the industry average.
-- Written by a member of TheStreet Ratings Staff