NorthStar would reportedly pay about $4 billion for the company according to the report. While the companies are reportedly in advanced negotiations, there is a chance the discussions will break down with no deal made. The exclusivity period for the discussions ends on Friday.
Reports of the deal also helped drive up the stock of spin-off company NorthStar Asset Management (NSAM). Shares of NorthStar Asset Management were gaining 2.9% to $19.45.
TheStreet Ratings team rates NORTHSTAR REALTY FINANCE CP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate NORTHSTAR REALTY FINANCE CP (NRF) 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 robust revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 10.3%. Since the same quarter one year prior, revenues rose by 47.8%. 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.
- The gross profit margin for NORTHSTAR REALTY FINANCE CP is rather high; currently it is at 50.85%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -58.30% is in-line with the industry average.
- Net operating cash flow has increased to $53.70 million or 25.82% when compared to the same quarter last year. Despite an increase in cash flow, NORTHSTAR REALTY FINANCE CP's average is still marginally south of the industry average growth rate of 29.95%.
- The share price of NORTHSTAR REALTY FINANCE CP has not done very well: it is down 9.36% 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, 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 348.9% when compared to the same quarter one year ago, falling from $47.96 million to -$119.37 million.
- You can view the full analysis from the report here: NRF Ratings Report