3 Stocks Pushing The Real Estate Industry Lower

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The Real Estate industry as a whole closed the day down 0.1% versus the S&P 500, which was down 0.5%. Laggards within the Real Estate industry included Supertel Hospitality ( SPPR), down 10.3%, Wheeler Real Estate Investment ( WHLR), down 1.9%, Gazit-Globe ( GZT), down 1.9%, Tejon Ranch ( TRC), down 2.7% and LGI Homes ( LGIH), down 4.0%.

TheStreet Ratings Group would like to highlight 3 stocks that pushed the industry lower today:

Tejon Ranch ( TRC) is one of the companies that pushed the Real Estate industry lower today. Tejon Ranch was down $0.85 (2.7%) to $31.11 on light volume. Throughout the day, 17,827 shares of Tejon Ranch exchanged hands as compared to its average daily volume of 51,700 shares. The stock ranged in price between $30.90-$31.82 after having opened the day at $31.82 as compared to the previous trading day's close of $31.96.

Tejon Ranch Co., through its subsidiaries, operates as a real estate development and agribusiness company. The company operates in four business segments: Commercial/Industrial Real Estate Development, Resort/Residential Real Estate Development, Mineral Resources, and Farming. Tejon Ranch has a market cap of $657.8 million and is part of the financial sector. Shares are down 13.1% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Tejon Ranch as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.

Highlights from TheStreet Ratings analysis on TRC go as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Management & Development industry. The net income increased by 81.0% when compared to the same quarter one year prior, rising from $0.62 million to $1.11 million.
  • TRC's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 6.08, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has increased to $4.78 million or 34.09% when compared to the same quarter last year. Despite an increase in cash flow, TEJON RANCH CO's cash flow growth rate is still lower than the industry average growth rate of 61.72%.
  • TEJON RANCH CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, TEJON RANCH CO reported lower earnings of $0.20 versus $0.22 in the prior year.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Real Estate Management & Development industry and the overall market on the basis of return on equity, TEJON RANCH CO underperformed against that of the industry average and is significantly less than that of the S&P 500.

You can view the full analysis from the report here: Tejon Ranch Ratings Report

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At the close, Gazit-Globe ( GZT) was down $0.25 (1.9%) to $13.27 on average volume. Throughout the day, 27,902 shares of Gazit-Globe exchanged hands as compared to its average daily volume of 23,600 shares. The stock ranged in price between $13.00-$13.39 after having opened the day at $13.38 as compared to the previous trading day's close of $13.52.

Gazit-Globe Ltd., through its subsidiaries, owns, develops, operates, and redevelops supermarket-anchored shopping centers in North America, Europe, Israel, and Brazil. The company operates in two segments, Standing Investment and Development. Gazit-Globe has a market cap of $2.4 billion and is part of the financial sector. Shares are up 0.8% year-to-date as of the close of trading on Thursday. Currently there are no analysts who rate Gazit-Globe a buy, no analysts rate it a sell, and 1 rates it a hold.

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TheStreet Ratings rates Gazit-Globe as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk and disappointing return on equity.

Highlights from TheStreet Ratings analysis on GZT go as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Management & Development industry. The net income has significantly decreased by 38.4% when compared to the same quarter one year ago, falling from $94.77 million to $58.41 million.
  • The debt-to-equity ratio is very high at 4.88 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.48, which clearly demonstrates the inability to cover short-term cash needs.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Real Estate Management & Development industry and the overall market on the basis of return on equity, GAZIT GLOBE has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • In its most recent trading session, GZT 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, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • GAZIT GLOBE's earnings per share declined by 42.1% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, GAZIT GLOBE increased its bottom line by earning $1.61 versus $1.51 in the prior year.

You can view the full analysis from the report here: Gazit-Globe Ratings Report

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Supertel Hospitality ( SPPR) was another company that pushed the Real Estate industry lower today. Supertel Hospitality was down $0.24 (10.3%) to $2.10 on heavy volume. Throughout the day, 152,452 shares of Supertel Hospitality exchanged hands as compared to its average daily volume of 31,700 shares. The stock ranged in price between $2.01-$2.31 after having opened the day at $2.29 as compared to the previous trading day's close of $2.34.

Supertel Hospitality, Inc. is an independent equity real estate investment trust. The firm invests in the real estate markets of the United States. It primarily invests in limited-service hotels. The firm was formerly known as Humphrey Hospitality Trust, Inc. Supertel Hospitality, Inc. Supertel Hospitality has a market cap of $6.8 million and is part of the financial sector. Shares are down 4.1% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Supertel Hospitality as a sell. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself.

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Highlights from TheStreet Ratings analysis on SPPR go as follows:

  • SPPR's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 77.25%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, SUPERTEL HOSPITALITY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • SPPR, with its decline in revenue, underperformed when compared the industry average of 10.3%. Since the same quarter one year prior, revenues slightly dropped by 0.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Net operating cash flow has significantly increased by 53.28% to -$0.18 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 29.95%.
  • SUPERTEL HOSPITALITY 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. During the past fiscal year, SUPERTEL HOSPITALITY INC continued to lose money by earning -$1.38 versus -$4.96 in the prior year.

You can view the full analysis from the report here: Supertel Hospitality Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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