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"We rate CUBESMART (CUBE) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CUBE's revenue growth has slightly outpaced the industry average of 8.4%. Since the same quarter one year prior, revenues rose by 15.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- CUBESMART 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. During the past fiscal year, CUBESMART turned its bottom line around by earning $0.03 versus -$0.17 in the prior year. This year, the market expects an improvement in earnings ($0.15 versus $0.03).
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- 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 on the basis of return on equity, CUBESMART underperformed against that of the industry average and is significantly less than that of the S&P 500.
- The gross profit margin for CUBESMART is rather low; currently it is at 22.33%. Regardless of CUBE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CUBE's net profit margin of 8.90% is significantly lower than the industry average.
- You can view the full analysis from the report here: CUBE Ratings Report