Why Colony Financial (CLNY) Stock Is Down Today

NEW YORK (TheStreet) -- Colony Financial (CLNY) was falling -2.6% to $22.38 Thursday after pricing a public offering of 15 million shares of common stock.

The company said it priced the offering of 15 million shares for expected gross proceeds of about $336 million. The underwriters of the offering have an option to buy up to an additional 2.25 million shares.

Colony Financial expects to use part of the proceeds to repay part of its revolving credit facility. The company will use the remainder to acquire target assets, for working capital, and general corporate purposes.

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TheStreet Ratings team rates COLONY FINANCIAL INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate COLONY FINANCIAL INC (CLNY) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, expanding profit margins, good cash flow from operations and increase in stock price during the past year. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

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

  • CLNY's very impressive revenue growth greatly exceeded the industry average of 10.3%. Since the same quarter one year prior, revenues leaped by 76.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in 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 12.0% when compared to the same quarter one year prior, going from $19.41 million to $21.73 million.
  • The gross profit margin for COLONY FINANCIAL INC is rather high; currently it is at 64.29%. Regardless of CLNY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CLNY's net profit margin of 36.70% significantly outperformed against the industry.
  • Net operating cash flow has increased to $33.32 million or 23.71% when compared to the same quarter last year. Despite an increase in cash flow, COLONY FINANCIAL INC's average is still marginally south of the industry average growth rate of 29.86%.
  • 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.
  • You can view the full analysis from the report here: CLNY Ratings Report

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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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