NEW YORK (TheStreet) -- Shares of Rayonier Inc. (RYN) are lower by -25.37% to $36.22 in pre-market trading this morning following a ratings downgrade to "sector perform" from "outperform" at RBC Capital.
The firm said it dropped its rating on the international forest products company based on a valuation call.
RBC cut its price target on the stock to $37 from $52.
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Additionally, Rayonier announced on June 27 that it completed the spin-off of its new specialty chemical company, Rayonier Advanced Materials, which will begin trading today on the New York Stock Exchange under the ticker RYAM.
Separately, TheStreet Ratings team rates RAYONIER INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate RAYONIER INC (RYN) a BUY. This is driven by several positive factors, 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 good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has increased to $99.27 million or 10.72% when compared to the same quarter last year. Despite an increase in cash flow, RAYONIER INC's cash flow growth rate is still lower than the industry average growth rate of 30.73%.
- RYN, with its decline in revenue, underperformed when compared the industry average of 10.3%. Since the same quarter one year prior, revenues slightly dropped by 1.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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, RAYONIER INC's return on equity exceeds that of both the industry average and the S&P 500.
- RAYONIER 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. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, RAYONIER INC increased its bottom line by earning $2.54 versus $2.11 in the prior year. For the next year, the market is expecting a contraction of 25.2% in earnings ($1.90 versus $2.54).
- The share price of RAYONIER INC has not done very well: it is down 11.02% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- You can view the full analysis from the report here: RYN Ratings Report