Today, PEI has been upgraded by The Street Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its increase in net income, good cash flow from operations and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including generally poor debt management, disappointing return on equity and poor profit margins.
Highlights from the ratings report include:
• 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 30.2% when compared to the same quarter one year prior, rising from -$14.32 million to -$10.00 million.
• Net operating cash flow has significantly increased by 60.47% to $32.58 million when compared to the same quarter last year. In addition, PEI has also vastly surpassed the industry average cash flow growth rate of -37.51%.
• PEI has improved earnings per share by 33.3% 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 two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, PEI reported poor results of -$1.67 versus -$1.45 in the prior year.
• The debt-to-equity ratio is very high at 4.09 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.
• Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, PENNSYLVANIA RE INVS TRUST's return on equity significantly trails that of both the industry average and the S&P 500.