NEW YORK (
-- Hatteras Financial Corporation
) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally poor debt management.
Highlights from the ratings report include:
- The debt-to-equity ratio is very high at 7.58 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.
- 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 decreased by 1.5% when compared to the same quarter one year ago, dropping from $46.33 million to $45.64 million.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
- Despite its growing revenue, the company underperformed as compared with the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 1.3%. 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.
Hatteras Financial Corp. operates as an externally-managed mortgage real estate investment trust (REIT). The company has a P/E ratio of 6.5, equal to the average real estate industry P/E ratio and below the S&P 500 P/E ratio of 16.7. Hatteras Financial has a market cap of $2 billion and is part of the
industry. Shares are down 8.6% year to date as of the close of trading on Monday.
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