Rating Change #7
Colony Financial Inc (CLNY) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
Highlights from the ratings report include:
- CLNY's very impressive revenue growth greatly exceeded the industry average of 17.2%. Since the same quarter one year prior, revenues leaped by 82.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- CLNY's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- COLONY FINANCIAL INC's earnings per share declined by 24.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, COLONY FINANCIAL INC increased its bottom line by earning $1.48 versus $1.18 in the prior year. This year, the market expects an improvement in earnings ($1.83 versus $1.48).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, COLONY FINANCIAL INC's return on equity is below that of both the industry average and the S&P 500.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, CLNY has underperformed the S&P 500 Index, declining 11.56% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
Colony Financial, Inc., a real estate finance company, focuses on acquiring, originating, and managing commercial mortgage loans and other commercial real estate-related debt investments. The company qualifies as a real estate investment trust for federal income tax purposes. The company has a P/E ratio of 11.6, above the average real estate industry P/E ratio of 10.6 and below the S&P 500 P/E ratio of 17.7. Colony Financial has a market cap of $547.5 million and is part of the financial sector and real estate industry. Shares are up 4.7% year to date as of the close of trading on Wednesday.You can view the full Colony Financial Ratings Report or get investment ideas from our investment research center.