Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. TheStreet Ratings quantitative algorithm evaluates over 4,300 stocks on a daily basis by 32 different data factors and assigns a unique buy, sell, or hold recommendation on each stock. Click here to learn more.
NEW YORK (TheStreet) -- Sotherly Hotels (SOHO) 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 SOTHERLY HOTELS INC (SOHO) 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."
Must Read: Warren Buffett's 25 Favorite Stocks
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for SOTHERLY HOTELS INC is currently extremely low, coming in at 9.46%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.68% is significantly below that of the industry average.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, SOTHERLY HOTELS INC's return on equity is below that of both the industry average and the S&P 500.
- Net operating cash flow has significantly increased by 329.73% to $4.42 million when compared to the same quarter last year. In addition, SOTHERLY HOTELS INC has also vastly surpassed the industry average cash flow growth rate of 6.85%.
- This stock has increased by 41.74% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in SOHO do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
- You can view the full analysis from the report here: SOHO Ratings Report