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) -- Tanger Factory Outlet Centers (NYSE: SKT) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins.
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- TANGER FACTORY OUTLET CTRS 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, TANGER FACTORY OUTLET CTRS increased its bottom line by earning $0.56 versus $0.51 in the prior year. This year, the market expects an improvement in earnings ($0.78 versus $0.56).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 89.9% when compared to the same quarter one year prior, rising from $8.13 million to $15.44 million.
- 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, TANGER FACTORY OUTLET CTRS has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- The gross profit margin for TANGER FACTORY OUTLET CTRS is currently lower than what is desirable, coming in at 32.60%. Regardless of SKT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SKT's net profit margin of 17.29% is significantly lower than the industry average.
- Net operating cash flow has decreased to $35.29 million or 17.15% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, TANGER FACTORY OUTLET CTRS has marginally lower results.
-- Written by a member of TheStreet Ratings Staff