Why Campus Crest Communities (CCG) Is Falling Today

NEW YORK (TheStreet) -- Campus Crest Communities (CCG) fell 10.4% to $8.36 Thursday after it was downgraded by RW Baird and Bank of America-Merrill Lynch.

RW Baird downgraded to company to "neutral" from "outperform," lowering its price target to $9 from $12. Bank of America-Merrill Lynch downgraded Campus Crest to "neutral" from "buy." Both firms cited a poor 2014 guidance as cause for the downgrade.

For the full-year 2014, Campus Crest expects earnings of between 72 cents and 74 cents a share. The company reported earnings of 80 cents a share for 2013.

Must read: Campus Crest Communities Becomes Oversold

TheStreet Ratings team rates CAMPUS CREST COMMUNITIES INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate CAMPUS CREST COMMUNITIES INC (CCG) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, disappointing return on equity and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 6.8%. Since the same quarter one year prior, revenues rose by 20.2%. 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.
  • CAMPUS CREST COMMUNITIES INC 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. 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, CAMPUS CREST COMMUNITIES INC increased its bottom line by earning $0.16 versus $0.11 in the prior year. This year, the market expects an improvement in earnings ($0.18 versus $0.16).
  • 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 Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 46.3% when compared to the same quarter one year ago, falling from $8.99 million to $4.83 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, CAMPUS CREST COMMUNITIES INC underperformed against that of the industry average and is significantly less than that of the S&P 500.

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