CYS Investments (CYS) Stock Gains Despite Missing Estimates

NEW YORK (TheStreet) -- CYS Investments (CYS) was gaining 1.3% to $8.84 in after-hours trading Monday despite missing analysts' expectations for earnings in the first quarter.

For the first quarter the mortgage investment company posted earnings of28 cents a share. Analysts surveyed by Thomson Reuters expected earnings of 33 cents a share, which CYS Investments missed by 5 cents.

The company's interest rate spread net of hedge including Drop Income was 1.89% for the quarter, the same as the previous quarter. CYS Investments had a net realized and unrealized gain from investments of $105.9 million, including $16.7 million of net realized gain from the first quarter.

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TheStreet Ratings team rates CYS INVESTMENTS INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate CYS INVESTMENTS INC (CYS) a SELL. This is driven by some concerns, 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 deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

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 130.0% when compared to the same quarter one year ago, falling from -$39.94 million to -$91.86 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, CYS INVESTMENTS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 27.30%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 145.83% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • CYS INVESTMENTS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CYS INVESTMENTS INC swung to a loss, reporting -$2.87 versus $2.75 in the prior year. This year, the market expects an improvement in earnings ($1.42 versus -$2.87).
  • The gross profit margin for CYS INVESTMENTS INC is currently very high, coming in at 95.41%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -100.13% is in-line with the industry average.
  • You can view the full analysis from the report here: CYS Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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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