NEW YORK (TheStreet) -- Chimera Investment Corporation (CIM) has gained over the Friday and Monday trading sessions in a broad industry-wide rally on real estate investment trusts (REITs). The industry saw a boost late last week after a robust November jobs report gave Wall Street confidence an economic recovery was gaining traction.
By late afternoon, Chimera had moved 3.3% higher to $3.11, adding to an overall 19% increase since January. Fellow mortgage REITs Annaly Capital Management (NLY) and CYS Investments (CYS) have climbed 2.3% and 2.8%, respectively, over the trading session.
On Friday, TheStreet Ratings team upgraded Chimera Investment Corp to a "Buy" from "Hold" with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate Chimera Investment Corp (CIM) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, attractive valuation levels, expanding profit margins, increase in stock price during the past year and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 313.3% when compared to the same quarter one year prior, rising from -$60.04 million to $128.07 million.
- The gross profit margin for Chimera Investment Corp is currently very high, coming in at 88.74%. Regardless of CIM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CIM's net profit margin of 88.50% significantly outperformed against the industry.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- Chimera Investment Corp reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, Chimera Investment Corp reported lower earnings of 13 cents a share vs. 29 cents a share in the prior year. This year, the market expects an improvement in earnings (39 cents vs. 13 cents).
- You can view the full analysis from the report here: CIM Ratings Report