NEW YORK (TheStreet) -- RAIT Financial Trust (RAS) shares are down 7.73% to $5.37 in early afternoon trading on Friday after the real estate investment trust announced the pricing of its public offering of 8 million shares today.
The Philadelphia-based company priced its underwritten public offering of 8 million shares at $5.55 per share with underwriters being granted an addition 30 days to purchase up to 1.2 million extra shares.
The company said that it will use the proceeds to make investments in its business as well as general trust purposes.
The offering is expected to close on August 5.
TheStreet Ratings team rates RAIT FINANCIAL TRUST as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate RAIT FINANCIAL TRUST (RAS) a SELL. This is driven by several 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 disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, RAIT FINANCIAL TRUST's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for RAIT FINANCIAL TRUST is rather low; currently it is at 19.46%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 0.92% significantly trails the industry average.
- Net operating cash flow has significantly decreased to -$12.99 million or 158.31% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- RAS's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 31.66%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- RAIT FINANCIAL TRUST 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, RAIT FINANCIAL TRUST continued to lose money by earning -$3.88 versus -$4.58 in the prior year. This year, the market expects an improvement in earnings (-$0.26 versus -$3.88).
- You can view the full analysis from the report here: RAS Ratings Report