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) -- Highwoods Properties (NYSE: HIW) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including poor profit margins, weak operating cash flow and unimpressive growth in net income.
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- HIW's revenue growth has slightly outpaced the industry average of 8.4%. Since the same quarter one year prior, revenues rose by 13.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- HIGHWOODS PROPERTIES INC has improved earnings per share by 8.3% 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, HIGHWOODS PROPERTIES INC increased its bottom line by earning $0.67 versus $0.46 in the prior year. This year, the market expects an improvement in earnings ($0.69 versus $0.67).
- Net operating cash flow has decreased to $31.38 million or 25.48% when compared to the same quarter last year. Despite a decrease in cash flow HIGHWOODS PROPERTIES INC is still fairing well by exceeding its industry average cash flow growth rate of -65.62%.
- The gross profit margin for HIGHWOODS PROPERTIES INC is rather low; currently it is at 23.06%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 8.51% significantly trails the industry average.