NEW YORK (TheStreet) -- Shares of Douglas Emmett Inc. (DEI) are lower by -1.03% to $27.86 in early market trading after the real estate investment trust's rating was cut to "sell" from "hold" at Stifel Nicolaus (SF).
The firm cited valuation and a lack of development pipeline.
Separately, TheStreet Ratings team rates DOUGLAS EMMETT INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate DOUGLAS EMMETT INC (DEI) 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 revenue growth, reasonable valuation levels and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including poor profit margins and unimpressive growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.5%. Since the same quarter one year prior, revenues slightly increased by 3.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- The change in net income from the same quarter one year ago has exceeded that of the Real Estate Investment Trusts (REITs) industry average, but is less than that of the S&P 500. The net income has decreased by 2.0% when compared to the same quarter one year ago, dropping from $13.64 million to $13.36 million.
- The gross profit margin for DOUGLAS EMMETT INC is currently lower than what is desirable, coming in at 30.50%. 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.
- You can view the full analysis from the report here: DEI Ratings Report