Why MBIA (MBI) Stock Is Falling Today

NEW YORK (TheStreet) -- MBIA (MBI) shares are dropping, down -6.1% to $10.79, on Monday after being downgraded to "neutral" from "buy" by analysts at BTIG Research.

Shares are down on heavy volume with 4.37 million shares being traded, eclipsing the stock's 2.99 million three month daily average.

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Separately, TheStreet Ratings team rates MBIA INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate MBIA INC (MBI) a SELL. This is driven by a number of negative factors, 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 generally high debt management risk, weak operating cash flow, generally disappointing historical performance in the stock itself and disappointing return on equity."

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

  • The debt-to-equity ratio is very high at 2.46 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • Net operating cash flow has significantly decreased to -$424.00 million or 443.58% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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 Insurance industry and the overall market on the basis of return on equity, MBIA INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • MBI has underperformed the S&P 500 Index, declining 12.52% from its price level of one year ago. 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.
  • MBIA INC reported significant earnings per share improvement 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, MBIA INC reported lower earnings of $1.10 versus $6.33 in the prior year. This year, the market expects an improvement in earnings ($1.48 versus $1.10).
  • You can view the full analysis from the report here: MBI Ratings Report
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