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) -- Washington REIT (NYSE: WRE) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, disappointing return on equity and poor profit margins.
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- WASHINGTON REIT has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, WASHINGTON REIT reported lower earnings of $0.00 versus $0.13 in the prior year.
- 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, WASHINGTON REIT underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The gross profit margin for WASHINGTON REIT is rather low; currently it is at 21.02%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 28.24% is above that of the industry average.
- WRE, with its decline in revenue, underperformed when compared the industry average of 7.0%. Since the same quarter one year prior, revenues fell by 13.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Compared to where it was trading one year ago, WRE is down 13.55% to its most recent closing price of 23.74. Looking ahead, our view is that this stock still does not have good upside potential and may even suffer further declines.