NEW YORK (TheStreet) -- Shares of Nationstar Mortgage (NSM) were falling 9.6% to $28.17 on heavy trading volume Wednesday after the mortgage investment company announced the pricing of 17.5 million shares of common stock in its public offering.

Nationstar Mortgage priced the 17.5 million shares of common stock in the public offering for gross proceeds of about $500 million. The underwriters of the offer have a 30 day option to buy up to 2.625 million shares of common stock to cover over allotments.

The offering is expected to close on or close to March 30.

About 4.1 million shares of Nationstar Mortgage were traded by 11 a.m. Wednesday, well above the company's average trading volume of about 814,000 shares a day.

TheStreet Recommends

TheStreet Ratings team rates NATIONSTAR MORTGAGE HOLDINGS as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate NATIONSTAR MORTGAGE HOLDINGS (NSM) 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 revenue growth, growth in earnings per share and increase in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, poor profit margins and a generally disappointing performance in the stock itself."

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

  • The revenue growth came in higher than the industry average of 5.5%. Since the same quarter one year prior, revenues slightly increased by 5.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • NATIONSTAR MORTGAGE HOLDINGS reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NATIONSTAR MORTGAGE HOLDINGS increased its bottom line by earning $2.44 versus $2.41 in the prior year. This year, the market expects an improvement in earnings ($3.20 versus $2.44).
  • The gross profit margin for NATIONSTAR MORTGAGE HOLDINGS is currently lower than what is desirable, coming in at 29.34%. Regardless of NSM's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, NSM's net profit margin of 3.80% is significantly lower than the industry average.
  • Net operating cash flow has significantly decreased to -$185.43 million or 126.96% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: NSM Ratings Report