NEW YORK (TheStreet) -- Shares of RCS Capital Corp. (RCAP) are up 10.89% to $10.80 after American Realty Capital Properties (ARCP) said it will receive $60 million from a settlement over RCS Capital's decision to break off a deal for brokerage Cole Capital Partners LLC and Cole Capital Advisors Inc.
The broker-dealer and REIT also agreed to "terminate, unwind or otherwise discontinue all agreements, arrangements and understandings between the two companies and any of their respective subsidiaries," American Realty Capital Properties said.
RCS Capital called off an agreement to buy brokerage Cole Capital for $700 million in cash and stock and had been seeking to distance itself from American Realty Capital Properties, whose stock price has fallen since revealing in late October that it had overstated a common measure of the real-estate investment trust's profitability during the first and second quarters this year, the Wall Street Journal said.
Shares of American Realty Capital Properties are down 0.07% to $9.20.
Separately, TheStreet Ratings team rates RCS CAPITAL CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate RCS CAPITAL CORP (RCAP) 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 unimpressive growth in net income, 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:
- 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 Capital Markets industry. The net income has significantly decreased by 5872.6% when compared to the same quarter one year ago, falling from $0.56 million to -$32.27 million.
- The gross profit margin for RCS CAPITAL CORP is currently extremely low, coming in at 2.16%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -4.75% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$28.97 million or 396.85% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 35.19%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 3050.00% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- RCS CAPITAL CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This year, the market expects an improvement in earnings ($1.77 versus $0.10).
- You can view the full analysis from the report here: RCAP Ratings Report