Why Northstar Realty Finance (NRF) Stock Is Down Today

NEW YORK (TheStreet) -- Shares of Northstar Realty Finance  (NRF) fell 3% to $18.28 on high volume in morning trading Thursday after the company priced its public offering of common stock.

Northstar priced 45 million shares at $18.40 a share. The offering includes a 30-day option for underwriters to purchase up to 6.75 million additional shares. The company expects the offering to close on Sept. 9.

The company plans to use the net proceeds from the sale for general corporate purposes, possibly including repurchase and repayment of the company's liabilities.

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More than 17.7 million shares had changed hands as of 9:50 a.m., more than triple the average volume of 5,488,050.

Separately, TheStreet Ratings team rates NORTHSTAR REALTY FINANCE CP as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate NORTHSTAR REALTY FINANCE CP (NRF) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and disappointing return on equity."

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

  • The revenue growth greatly exceeded the industry average of 10.6%. Since the same quarter one year prior, revenues rose by 47.6%. 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.
  • Net operating cash flow has significantly increased by 59.88% to $90.86 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 17.20%.
  • 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. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • 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 15897.3% when compared to the same quarter one year ago, falling from $0.37 million to -$57.98 million.
  • 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, NORTHSTAR REALTY FINANCE CP's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: NRF Ratings Report

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