Realpage Inc. Stock Downgraded (RP)

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) -- Realpage (Nasdaq: RP) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been unimpressive growth in net income over time.

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Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 40.8% when compared to the same quarter one year ago, falling from $1.72 million to $1.02 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 Software industry and the overall market, REALPAGE INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • RP has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.86 is somewhat weak and could be cause for future problems.
  • REALPAGE INC's earnings per share declined by 50.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, REALPAGE INC turned its bottom line around by earning $0.07 versus -$0.03 in the prior year. This year, the market expects an improvement in earnings ($0.59 versus $0.07).
  • The gross profit margin for REALPAGE INC is rather high; currently it is at 64.50%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, RP's net profit margin of 1.14% significantly trails the industry average.
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RealPage, Inc. provides on demand software solutions for the rental housing industry in North America. The company has a P/E ratio of 310.8, above the S&P 500 P/E ratio of 17.7. Realpage has a market cap of $1.43 billion and is part of the technology sector and computer software & services industry. Shares are down 13.6% year to date as of the close of trading on Wednesday.

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

-- Written by a member of TheStreet Ratings Staff

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