Why Nordic American Tankers (NAT) Stock is Down Today

NEW YORK (TheStreet) -- Nordic American Tankers  (NAT) fell Tuesday after the company upsized its public offering by two million shares.

The company is now offering 12 million shares at $8.62 a share. The offering also includes a 30-day option for underwriters to purchase up to an additional 1.8 million shares. Nordic expects the offering to close on Friday.

The company plans to use the net proceeds from the offering to help purchase two to four vessels.

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TheStreet Ratings team rates NORDIC AMERICAN TANKERS LTD as a "sell" with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate NORDIC AMERICAN TANKERS LTD (NAT) a SELL. This is driven by several weaknesses, 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 disappointing return on equity, weak operating cash flow and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, NORDIC AMERICAN TANKERS LTD'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 -$18.25 million or 180.70% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for NORDIC AMERICAN TANKERS LTD is currently extremely low, coming in at 8.15%. Regardless of NAT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, NAT's net profit margin of -33.75% significantly underperformed when compared to the industry average.
  • In its most recent trading session, NAT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • NORDIC AMERICAN TANKERS LTD has improved earnings per share by 49.2% 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, NORDIC AMERICAN TANKERS LTD reported poor results of -$1.67 versus -$1.38 in the prior year. This year, the market expects an improvement in earnings (-$0.46 versus -$1.67).
  • You can view the full analysis from the report here: NAT Ratings Report

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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.

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