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) -- Macerich Company (NYSE: MAC) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.
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- The revenue growth came in higher than the industry average of 6.8%. Since the same quarter one year prior, revenues rose by 26.8%. 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.
- The gross profit margin for MACERICH CO is currently lower than what is desirable, coming in at 28.43%. Regardless of MAC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, MAC's net profit margin of 48.06% significantly outperformed against the industry.
- In its most recent trading session, MAC has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- MACERICH CO 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, MACERICH CO reported lower earnings of $0.98 versus $2.07 in the prior year. For the next year, the market is expecting a contraction of 25.5% in earnings ($0.73 versus $0.98).