Hersha Hospitality Trust Stock Downgraded (HT)

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) -- Hersha Hospitality (NYSE: HT) 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, growth in earnings per share and increase 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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Highlights from the ratings report include:
  • HT's revenue growth has slightly outpaced the industry average of 11.5%. Since the same quarter one year prior, revenues rose by 18.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HERSHA HOSPITALITY TRUST has improved earnings per share by 12.5% 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, HERSHA HOSPITALITY TRUST continued to lose money by earning -$0.02 versus -$0.05 in the prior year. This year, the market expects an improvement in earnings ($0.07 versus -$0.02).
  • In its most recent trading session, HT 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. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The gross profit margin for HERSHA HOSPITALITY TRUST is currently extremely low, coming in at 2.20%. Regardless of HT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, HT's net profit margin of -9.09% significantly underperformed when compared to the industry average.
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Operates as a Maryland REIT that focuses primarily on owning and operating high quality, upscale and mid-scale limited service and extended-stay hotels. Its portfolio consisted of 31 wholly-owned limited and full service properties and joint venture investments in 16 hotels as of Dec. 31, 2005. Hersha has a market cap of $1.19 billion and is part of the financial sector and real estate industry. Shares are up 19.6% year to date as of the close of trading on Wednesday.

You can view the full Hersha Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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