Public Storage Stock Buy Recommendation Reiterated (PSA)

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) -- Public Storage (NYSE: PSA) has been reiterated by TheStreet Ratings as a buy with a ratings score of A+. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, impressive record of earnings per share growth, increase in net income, revenue growth and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

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Highlights from the ratings report include:
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • PUBLIC STORAGE has improved earnings per share by 27.0% 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, PUBLIC STORAGE increased its bottom line by earning $3.84 versus $3.27 in the prior year. This year, the market expects an improvement in earnings ($4.59 versus $3.84).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income increased by 2.6% when compared to the same quarter one year prior, going from $205.85 million to $211.22 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.1%. Since the same quarter one year prior, revenues slightly increased by 7.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 46.80% is the gross profit margin for PUBLIC STORAGE which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 43.27% significantly outperformed against the industry average.

Public Storage operates as a real estate investment trust (REIT). It engages in the acquisition, development, ownership, and operation of self-storage facilities in the United States and Europe. Public has a market cap of $27.9 billion and is part of the financial sector and real estate industry. The company has a P/E ratio of 40.00, above the S&P 500 P/E ratio of 18.00. Shares are up 12.2% year to date as of the close of trading on Friday.

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

--Written by a member of TheStreet Ratings Staff.

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