NEW YORK (TheStreet) -- American Capital (ACAS - Get Report) rose 8.09% to $15.36 at 10:03 a.m. on Monday after the company announced it had purchased 8.9 million of its own shares and suspended its share repurchase program.
American Capital purchased the shares at $15.38 a share for a total of $137 million.
TheStreet Ratings team rates AMERICAN CAPITAL LTD as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMERICAN CAPITAL LTD (ACAS) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has increased to $57.00 million or 21.27% when compared to the same quarter last year. Despite an increase in cash flow of 21.27%, AMERICAN CAPITAL LTD is still growing at a significantly lower rate than the industry average of 93.28%.
- The gross profit margin for AMERICAN CAPITAL LTD is rather high; currently it is at 55.08%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, ACAS's net profit margin of -154.23% significantly underperformed when compared to the industry average.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, AMERICAN CAPITAL LTD underperformed against that of the industry average and is significantly less than that of the S&P 500.
- In its most recent trading session, ACAS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- You can view the full analysis from the report here: ACAS Ratings Report