Why American Capital (ACAS) is Lower on Tuesday

NEW YORK (TheStreet) -- American Capital (ACAS) is lower on Tuesday after revenue and net operating income came in lower than expected.

By midafternoon, shares had taken off 7.1% to $14.81.

In the three months to December, American Capital reported per-share earnings of 19 cents on revenue 34.4% lower year-over-year to $118 million. Analysts surveyed by Thomson Reuters had expected earnings of 24 cents a share on $136.14 million.

Quarterly net operating income of 14 cents a share missed consensus by 10 cents a share.

The Maryland-based firm said net asset value per share of $18.97 was 2.9% lower from $19.54 at the end of the third quarter.

One factor dragging on net asset value was a $185 million charge on unrealized depreciation in the company's investment in American Capital Asset Management, due to the reduction in projected management fees from the two mortgage REITs it manages.

"In 2013, we modestly increased our book value per share by 6%, despite the headwinds of a decrease in value of American Capital Asset Management and our Operating Companies," said CEO Malon Wilkus in a statement.

Must Read: American Capital Announces Proposed Refinancing Of $450 Million Senior Secured Credit Facility

TheStreet Ratings team rates AMERICAN CAPITAL LTD as a Hold with a ratings score of C-. The team has this to say about their recommendation:

"We rate AMERICAN CAPITAL LTD (ACAS) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."

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