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"We rate ALTO PALERMO SA (APSA) a BUY. This is driven by multiple 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 notable return on equity, good cash flow from operations, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. 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:
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Real Estate Management & Development industry and the overall market, ALTO PALERMO SA's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has increased to $31.69 million or 21.50% when compared to the same quarter last year. In addition, ALTO PALERMO SA has also vastly surpassed the industry average cash flow growth rate of -77.09%.
- The gross profit margin for ALTO PALERMO SA is rather high; currently it is at 54.94%. Regardless of APSA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, APSA's net profit margin of 14.18% compares favorably to the industry average.
- ALTO PALERMO SA's earnings per share declined by 27.9% 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, ALTO PALERMO SA increased its bottom line by earning $1.47 versus $1.45 in the prior year.
- APSA, with its decline in revenue, underperformed when compared the industry average of 7.0%. Since the same quarter one year prior, revenues slightly dropped by 4.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: APSA Ratings Report