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"We rate REALOGY HOLDINGS CORP (RLGY) a BUY. This is driven by several positive factors, 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 and largely solid financial position with reasonable debt levels by most measures. 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:
- 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. Compared to other companies in the Real Estate Management & Development industry and the overall market on the basis of return on equity, REALOGY HOLDINGS CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- RLGY, with its decline in revenue, slightly underperformed the industry average of 7.0%. Since the same quarter one year prior, revenues slightly dropped by 1.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Despite the current debt-to-equity ratio of 1.96, it is still below the industry average, suggesting that this level of debt is acceptable within the Real Estate Management & Development industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.86 is weak.
- REALOGY HOLDINGS CORP's earnings per share declined by 8.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, REALOGY HOLDINGS CORP turned its bottom line around by earning $2.96 versus -$3.73 in the prior year. For the next year, the market is expecting a contraction of 64.2% in earnings ($1.06 versus $2.96).
- The gross profit margin for REALOGY HOLDINGS CORP is currently lower than what is desirable, coming in at 25.87%. Regardless of RLGY's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.53% trails the industry average.
- You can view the full analysis from the report here: RLGY Ratings Report