Why Retail Opportunity Investments (ROIC) Stock Is Down After-Hours Wednesday

NEW YORK (TheStreet) -- Retail Opportunity Investments (ROIC) was falling 2.7% to $15.00 after-hours Wednesday after announcing a proposed offering of common stock.

The company announced it plans to offer 12.5 million shares of common stock in the offering. Retail Opportunity Investments will give the underwriters a 30-day option to buy up to an additional 1.875 million shares.

Retail Opportunity Investments will use the proceeds from the offering to pay down borrowing under its $350 million unsecured revolving credit facility.

Citigroup and Wells Fargo Securities will act as joint book-running managers for the offering.

Must read: Warren Buffett's 25 Favorite Stocks

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TheStreet Ratings team rates RETAIL OPPORTUNITY INVTS CP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate RETAIL OPPORTUNITY INVTS CP (ROIC) a BUY. This is driven by a few notable strengths, 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 robust revenue growth, compelling growth in net income, good cash flow from operations, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins."

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

  • The revenue growth greatly exceeded the industry average of 10.3%. Since the same quarter one year prior, revenues rose by 47.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income increased by 36.8% when compared to the same quarter one year prior, rising from $2.29 million to $3.13 million.
  • Net operating cash flow has significantly increased by 268.61% to $16.27 million when compared to the same quarter last year. In addition, RETAIL OPPORTUNITY INVTS CP has also vastly surpassed the industry average cash flow growth rate of 29.99%.
  • 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.
  • RETAIL OPPORTUNITY INVTS CP reported flat earnings per share in the most recent quarter. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, RETAIL OPPORTUNITY INVTS CP increased its bottom line by earning $0.47 versus $0.15 in the prior year.
  • You can view the full analysis from the report here: ROIC 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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