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TheStreet Open House

Why Senior Housing Properties Trust (SNH) Stock Is Slipping After Hours

Stocks in this article: SNH

NEW YORK (TheStreet) -- Senior Housing Properties Trust (SNH) is moving lower in extended trading after announcing a proposed public offering of 12 million common shares.

In a statement, the diversified real estate investment trust said it expects to use proceeds to "repay amounts outstanding on its revolving credit facility and for general business purposes, including funding, in part, the pending acquisition of two biotech medical office buildings in Boston."

Underwriters will also be granted a 30-day option to purchase up to an additional 1.8 million shares.

Bank of America, Jefferies, Citigroup, Morgan Stanley and RBC Capital Markets will act as joint book-running managers for the offering.

After the bell, shares had slid 4.3% to $21.80.

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TheStreet Ratings team rates SENIOR HOUSING PPTYS TRUST as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate SENIOR HOUSING PPTYS TRUST (SNH) a BUY. This is driven by a few notable strengths, 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 increase in net income, revenue growth, reasonable valuation levels, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 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 61.8% when compared to the same quarter one year prior, rising from $44.64 million to $72.21 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.8%. Since the same quarter one year prior, revenues slightly increased by 4.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has increased to $58.52 million or 32.13% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 11.04%.
  • 36.83% is the gross profit margin for SENIOR HOUSING PPTYS TRUST which we consider to be strong. Regardless of SNH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SNH's net profit margin of 36.00% significantly outperformed against the industry.
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