NEW YORK ( TheStreet) -- Invesco Mortgage Capital (NYSE: IVR) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, generally poor debt management and a generally disappointing performance in the stock itself.
- ACTIVE STOCK TRADERS: Check out TheStreet's special offer for Real Money, headlined by Jim Cramer, now!
- IVR's very impressive revenue growth greatly exceeded the industry average of 18.0%. Since the same quarter one year prior, revenues leaped by 103.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, INVESCO MORTGAGE CAPITAL INC's return on equity exceeds that of both the industry average and the S&P 500.
- INVESCO MORTGAGE CAPITAL INC's earnings per share declined by 28.7% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, INVESCO MORTGAGE CAPITAL INC reported lower earnings of $3.45 versus $3.69 in the prior year. For the next year, the market is expecting a contraction of 18.8% in earnings ($2.80 versus $3.45).
- The debt-to-equity ratio is very high at 6.12 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.
-- Written by a member of TheStreet Ratings Staff