Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- Prologis (NYSE: PLD) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- 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 128.0% when compared to the same quarter one year prior, rising from -$218.41 million to $61.19 million.
- PROLOGIS INC 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, PROLOGIS INC turned its bottom line around by earning $0.42 versus -$0.34 in the prior year. For the next year, the market is expecting a contraction of 19.0% in earnings ($0.34 versus $0.42).
- PLD, with its decline in revenue, underperformed when compared the industry average of 9.7%. Since the same quarter one year prior, revenues slightly dropped by 8.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- 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, PROLOGIS INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The gross profit margin for PROLOGIS INC is rather low; currently it is at 23.67%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, PLD's net profit margin of 12.78% is significantly lower than the industry average.