NEW YORK (TheStreet) -- Shares of American Realty Capital Partners Inc. (ARCP - Get Report) are up 2.65% to $12.95 on Tuesday after the real estate investment trust announced it's not in merger talks with NorthStar Realty Finance Corp. (NRF).
Reuters reported it spoke to sources that said American Reality and NorthStar were in preliminary discussions regarding a deal.
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TheStreet Ratings team rates AMERICAN RLTY CAP PPTY INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMERICAN RLTY CAP PPTY INC (ARCP) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- AMERICAN RLTY CAP PPTY INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, AMERICAN RLTY CAP PPTY INC reported poor results of -$2.36 versus -$0.47 in the prior year.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income has significantly decreased by 980.4% when compared to the same quarter one year ago, falling from -$14.61 million to -$157.83 million.
- Net operating cash flow has significantly decreased to -$29.10 million or 1197.73% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The share price of AMERICAN RLTY CAP PPTY INC has not done very well: it is down 19.85% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, AMERICAN RLTY CAP PPTY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: ARCP Ratings Report