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) -- AmREIT (NYSE: AMRE) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.
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- AMRE's revenue growth has slightly outpaced the industry average of 7.4%. Since the same quarter one year prior, revenues rose by 14.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, AMREIT INC's return on equity is below that of both the industry average and the S&P 500.
- The share price of AMREIT INC has not done very well: it is down 7.45% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- The gross profit margin for AMREIT INC is rather low; currently it is at 23.82%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 10.75% significantly trails the industry average.