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) -- Duke Realty (NYSE: DRE) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, good cash flow from operations, impressive record of earnings per share growth and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins.
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- DRE's revenue growth has slightly outpaced the industry average of 6.3%. Since the same quarter one year prior, revenues slightly increased by 9.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 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 450.3% when compared to the same quarter one year prior, rising from -$21.96 million to $76.93 million.
- Net operating cash flow has increased to $118.13 million or 21.00% when compared to the same quarter last year. In addition, DUKE REALTY CORP has also vastly surpassed the industry average cash flow growth rate of -70.56%.
- DUKE REALTY CORP 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, DUKE REALTY CORP turned its bottom line around by earning $0.06 versus -$0.51 in the prior year. For the next year, the market is expecting a contraction of 491.7% in earnings (-$0.24 versus $0.06).
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.