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Why NorthStar Realty Finance (NRF) Stock Is Down in After-Hours Trading Today

Stocks in this article: NRF

NEW YORK (TheStreet) -- NorthStar Realty Finance (NRF) was falling -2.4% to $18.40 after-hours Wednesday after announcing a public offering of common stock.

The company will offer 45 million shares in the public offering. At least 22.5 million shares in the offering will be subject to a forward sale, and will be sold to Deutsche Bank Securities (DB) . The remaining shares in the offering will be newly issued by NorthStar Realty Finance.

NorthStar Realty Finance plans to use the net proceeds of the offering for general corporate purposes. Those purposes may include funding the equity portion of a $1.8 billion acquisition of two portfolios of "upscale extended stay and premium branded elect service hotels," the repurchase or repayment of liabilities, and other potential acquisitions. The

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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, good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and disappointing return on equity."

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

  • The revenue growth greatly exceeded the industry average of 10.6%. Since the same quarter one year prior, revenues rose by 47.6%. 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.
  • Net operating cash flow has significantly increased by 59.88% to $90.86 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 17.20%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • 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 15897.3% when compared to the same quarter one year ago, falling from $0.37 million to -$57.98 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, NORTHSTAR REALTY FINANCE CP'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: NRF Ratings Report

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