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) -- UDR (NYSE: UDR) has been upgraded by TheStreet Ratings from sell to buy. The company's strengths can be seen in multiple areas, such as its revenue growth and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- UDR 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, UDR INC continued to lose money by earning -$0.25 versus -$0.67 in the prior year. This year, the market expects an improvement in earnings ($0.00 versus -$0.25).
- Despite its growing revenue, the company underperformed as compared with the industry average of 11.5%. Since the same quarter one year prior, revenues slightly increased by 7.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- 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, UDR INC's return on equity significantly trails that of both the industry average and the S&P 500.
- UDR has underperformed the S&P 500 Index, declining 6.65% from its price level of one year ago. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- The gross profit margin for UDR INC is currently extremely low, coming in at 14.50%. Regardless of UDR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, UDR's net profit margin of -0.14% significantly underperformed when compared to the industry average.
-- Written by a member of TheStreet Ratings Staff