The Supreme Court's decision favors Doral, expedites the mandate and remands the case to the Court of First Instance to be continued immediately.
"The Puerto Rico Supreme Court has recognized once again the important public interest and urgency of this case and has ordered the court to act diligently and immediately. Now the burden is on government to demonstrate the basis for its decision to arbitrarily nullify its longstanding tax agreement with Doral," said Doral's legal counsel Matthew D. McGill in a statement.
"While we are confident that our case will prevail in court, we hope that the government of Puerto Rico will take this opportunity to reconsider its ill-conceived decision to abandon its contractual obligation to Doral. And we continue to urge the government to negotiate a solution that is fair for all parties and that is in accordance with a series of tax agreements over the last eight years that have continually ratified the government's debt to Doral."
The stock was up 42.34% to $6.69 at 11:29 a.m. Nearly 5 million shares had changed hands, compared to the average volume of 1,355,980.
Separately, TheStreet Ratings team rates DORAL FINANCIAL CORP as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate DORAL FINANCIAL CORP (DRL) a SELL. This is driven by a number of negative factors, 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 feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- DORAL FINANCIAL 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. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, DORAL FINANCIAL CORP reported poor results of -$14.84 versus -$2.00 in the prior year.
- 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 Thrifts & Mortgage Finance industry. The net income has significantly decreased by 280.0% when compared to the same quarter one year ago, falling from $28.26 million to -$50.87 million.
- 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 Thrifts & Mortgage Finance industry and the overall market, DORAL FINANCIAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to $25.70 million or 58.71% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly 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 74.99%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 301.75% compared to the year-earlier 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.
- You can view the full analysis from the report here: DRL Ratings Report
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.