Mack-Cali Realty (CLI) Stock Rises After Company Announces CEO Change

NEW YORK (TheStreet) -- Shares of Mack-Cali Realty  (CLI) rose 5.7% to $19.65 in afternoon trading Tuesday after the real estate investment trust announced CEO Mitchell E. Hersh would step down as CEO and president in May 2015 and would not seek re-election to the board.

The board will assemble a search committee to succeed the 17-year veteran.

"It has been a privilege to lead the finest employees in the industry, whose commitment and hard work never ceases to impress me," Hersh said in a company statement.

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Mack-Cali, which has interest in 282 properties in the Northeast, has been struggling to recover from the economic crisis. The company sliced its quarterly dividend in half in May to 15 cents.

Separately, TheStreet Ratings team rates MACK-CALI REALTY CORP as a "sell" with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate MACK-CALI REALTY CORP (CLI) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes 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 Investment Trusts (REITs) industry. The net income has significantly decreased by 57.3% when compared to the same quarter one year ago, falling from $4.64 million to $1.98 million.
  • The gross profit margin for MACK-CALI REALTY CORP is rather low; currently it is at 19.52%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, CLI's net profit margin of 1.27% is significantly lower than the industry average.
  • Net operating cash flow has decreased to $30.55 million or 21.14% when compared to the same quarter last year. Despite a decrease in cash flow MACK-CALI REALTY CORP is still fairing well by exceeding its industry average cash flow growth rate of -64.23%.
  • CLI has underperformed the S&P 500 Index, declining 10.32% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, MACK-CALI REALTY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: CLI Ratings Report

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