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) -- Brookfield Residential Properties (NYSE: BRP) 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, largely solid financial position with reasonable debt levels by most measures and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins.
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- The revenue growth greatly exceeded the industry average of 11.3%. Since the same quarter one year prior, revenues rose by 29.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.93, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
- BROOKFIELD RESIDENTIAL PPTYS 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, BROOKFIELD RESIDENTIAL PPTYS increased its bottom line by earning $0.90 versus $0.07 in the prior year.
- The gross profit margin for BROOKFIELD RESIDENTIAL PPTYS is currently lower than what is desirable, coming in at 29.90%. Regardless of BRP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.50% trails the industry average.
- Net operating cash flow has significantly decreased to -$164.35 million or 103.98% when compared to the same quarter last year. Despite a decrease in cash flow of 103.98%, BROOKFIELD RESIDENTIAL PPTYS is in line with the industry average cash flow growth rate of -108.62%.
-- Written by a member of TheStreet Ratings Staff