NEW YORK (TheStreet) -- Ashford Hospitality Trust (AHT) shares are down 6.3% to $10.50 in trading Wednesday.
The drop comes after the real estate investment trust announced the pricing of its public offering of 7.5 million shares at $10.70 per share.
The company will allow underwriters 30 days to purchase an additional 1.125 million shares.
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The offering is expected to close on April 14.
TheStreet Ratings team rates ASHFORD HOSPITALITY TRUST as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ASHFORD HOSPITALITY TRUST (AHT) 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 unimpressive growth in net income, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 37.8% when compared to the same quarter one year ago, falling from -$12.60 million to -$17.37 million.
- 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 Real Estate Investment Trusts (REITs) industry and the overall market, ASHFORD HOSPITALITY TRUST's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for ASHFORD HOSPITALITY TRUST is currently extremely low, coming in at 6.67%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -8.64% is significantly below that of the industry average.
- In its most recent trading session, AHT 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. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- AHT, with its decline in revenue, underperformed when compared the industry average of 6.7%. Since the same quarter one year prior, revenues fell by 15.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: AHT Ratings Report