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NEW YORK (TheStreet) -- Empire State Realty Trust (ESRT) has been downgraded by TheStreet Ratings from Hold to Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate EMPIRE STATE REALTY TRUST INC (ESRT) a SELL. This is driven by a few notable 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. Among the areas we feel are negative, one of the most important has been poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for EMPIRE STATE REALTY TR INC is currently lower than what is desirable, coming in at 25.62%. Regardless of ESRT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, ESRT's net profit margin of 4.91% is significantly lower than the industry average.
- EMPIRE STATE REALTY TR INC 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, EMPIRE STATE REALTY TR INC reported lower earnings of $0.41 versus $0.53 in the prior year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 264.8% when compared to the same quarter one year prior, rising from $2.28 million to $8.32 million.
- Compared to where it was a year ago today, the stock is now trading at a higher level, and has traded in line with the S&P 500. Regardless of the rise in share value over the previous year, we feel that the risks involved in investing in this stock do not compensate for any future upside potential.
- Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, EMPIRE STATE REALTY TR INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- You can view the full analysis from the report here: ESRT Ratings Report