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EdR's Corporate Credit Rating Raised by S&P: Time to Buy?

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Ushering in good news for shareholders, EdR (EDR - Free Report) recently revealed that its corporate credit rating has been upgraded by Standard & Poor’s Ratings Services (S&P) to “BBB-” from “BB+” with a stable outlook.

S&P upgraded the rating based on EdR’s recent deleveraging activities as well as solid operating performance. The rating agency believes that tailwinds in the student housing industry will enable EdR to sustain its performance over the next two years.

Moreover, the rating agency expects EdR’s stabilized communities to deliver modest growth on the back of favorable near-term fundamentals and the delivery of new development projects to augment the company’s growth story.

We believe that the rating upgrade is a major positive for this collegiate housing real estate investment trust (REIT) as it enhances the company’s creditworthiness in the market and will likely boost investor confidence in the stock.

Specifically, an improvement in creditworthiness enables a company to enjoy reduced costs on its debts and better access to capital. This, in turn, improves the company’s financial flexibility and offers means to pursue growth strategies.

Notably, Memphis, TN-based EdR posted an earnings surprise of 11.11% in the last reported quarter. The company has delivered positive surprises in three of the trailing four quarters with an average beat of 3.52%.

EdR currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the residential REITs space include Armada Hoffler Properties, Inc. (AHH - Free Report) , Essex Property Trust Inc. (ESS - Free Report) and Equity LifeStyle Properties, Inc. (ELS - Free Report) . All these stocks hold a Zacks Rank #2 (Buy).

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