Why Education Realty Trust (EDR) Stock Is Up Today

NEW YORK (TheStreet) -- Education Realty Trust (EDR) was gaining 1.3% to $10.55 Thursday after pricing a 21.3 million share secondary offering.

The company priced the 21.3 million share offering, which is larger than the announced 19.8 million share offering, at $10.20 a share. The underwriters of the offering have a 30-day option to buy up to 3.195 million more shares.

Education Realty expects $208 million in net proceeds from the offering. The proceeds will be sued to pay for the acquisition of The District on Apache at Arizona State University. The company will also use the proceeds to reduce outstanding debt under its revolving credit facility, and for general corporate purchases.

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TheStreet Ratings team rates EDUCATION REALTY TRUST INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate EDUCATION REALTY TRUST INC (EDR) 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, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including poor profit margins and weak operating cash flow."

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

  • The revenue growth came in higher than the industry average of 10.3%. Since the same quarter one year prior, revenues rose by 21.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • EDUCATION REALTY TRUST INC 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. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, EDUCATION REALTY TRUST INC turned its bottom line around by earning $0.05 versus -$0.01 in the prior year. This year, the market expects an improvement in earnings ($0.16 versus $0.05).
  • The gross profit margin for EDUCATION REALTY TRUST INC is rather low; currently it is at 15.31%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 22.10% trails that of the industry average.
  • Net operating cash flow has decreased to $17.18 million or 13.47% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: EDR Ratings Report

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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.

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