Newcastle Investment Corporation Stock Upgraded (NCT)

NEW YORK ( TheStreet) -- Newcastle Investment Corporation (NYSE: NCT) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, good cash flow from operations 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:
  • Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, NEWCASTLE INVESTMENT CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 812.76% to $15.41 million when compared to the same quarter last year. In addition, NEWCASTLE INVESTMENT CORP has also vastly surpassed the industry average cash flow growth rate of -0.58%.
  • The gross profit margin for NEWCASTLE INVESTMENT CORP is rather high; currently it is at 60.40%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 25.70% trails the industry average.
  • 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 significantly decreased by 89.6% when compared to the same quarter one year ago, falling from $198.38 million to $20.70 million.
  • The debt-to-equity ratio is very high at 17.18 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.
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Operates as a REIT investing in credit-sensitive real estate securities, including commercial and residential mortgage-backed securities and unsecured REIT debt, mostly rated BBB or BB, which it seeks to match with liabilities with respect to interest rates and maturities. The company has a P/E ratio of 0.9, below the S&P 500 P/E ratio of 17.7. Newcastle Investment has a market cap of $529 million and is part of the financial sector and real estate industry. Shares are up 20.2% year to date as of the close of trading on Friday.

You can view the full Newcastle Investment Ratings Report or get investment ideas from our investment research center.
-- Written by a member of TheStreet RatingsStaff
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