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) -- Saul Centers (NYSE: BFS) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, disappointing return on equity, poor profit margins, weak operating cash flow and relatively poor performance when compared with the S&P 500 during the past year.
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- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 36.6% when compared to the same quarter one year ago, falling from $7.86 million to $4.98 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, SAUL CENTERS INC's return on equity is below that of both the industry average and the S&P 500.
- The gross profit margin for SAUL CENTERS INC is currently lower than what is desirable, coming in at 30.70%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 10.13% significantly trails the industry average.
- Net operating cash flow has decreased to $15.68 million or 20.57% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, SAUL CENTERS INC has marginally lower results.
- In its most recent trading session, BFS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
-- Written by a member of TheStreet Ratings Staff