NEW YORK (TheStreet) -- Shares of Brookdale Senior Living (BKD) fell 3.19% to $33.40 in after-hours trading Monday after the company announced a public offering of 8.75 million shares of common stock.
Brookdale, which operates residences for senior citizens, included a 30-day option in the offering for underwriters to purchase up to 1,312,500 shares.
The company said in a statement it plans to use the net proceeds from the offering to "finance the exercise of purchase options on certain communities currently leased by the company, to repay certain outstanding indebtedness with a weighted average interest rate of 7.3% and for other general corporate purposes, which may include additional debt repayments and the acceleration of capital investments in the company's communities and corporate infrastructure platform."
Separately, TheStreet Ratings team rates BROOKDALE SENIOR LIVING INC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate BROOKDALE SENIOR LIVING INC (BKD) 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 solid stock price performance, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 37.90% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 36.6% when compared to the same quarter one year prior, rising from -$5.20 million to -$3.30 million.
- BROOKDALE SENIOR LIVING INC has improved earnings per share by 25.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, BROOKDALE SENIOR LIVING INC continued to lose money by earning -$0.03 versus -$0.55 in the prior year. For the next year, the market is expecting a contraction of 400.0% in earnings (-$0.15 versus -$0.03).
- The gross profit margin for BROOKDALE SENIOR LIVING INC is rather low; currently it is at 20.79%. Regardless of BKD's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -0.44% trails the industry average.
- The debt-to-equity ratio is very high at 2.57 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.27, which clearly demonstrates the inability to cover short-term cash needs.
- You can view the full analysis from the report here: BKD Ratings Report
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