The real estate investment company was downgraded to "underperform" from "hold" at Jefferies Capital Partners (JEF).
The ratings downgrade was driven by weakened fundamentals and increased supply pressure.
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TheStreet Ratings team rates EQUITY RESIDENTIAL as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate EQUITY RESIDENTIAL (EQR) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 6.7%. Since the same quarter one year prior, revenues rose by 41.7%. 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.
- 35.21% is the gross profit margin for EQUITY RESIDENTIAL which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 17.30% trails the industry average.
- EQUITY RESIDENTIAL's earnings per share declined by 40.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, EQUITY RESIDENTIAL swung to a loss, reporting -$0.46 versus $0.43 in the prior year. This year, the market expects an improvement in earnings ($1.38 versus -$0.46).
- In its most recent trading session, EQR 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. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- Net operating cash flow has decreased to $101.82 million or 44.43% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: EQR Ratings Report