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NEW YORK (TheStreet) -- American Capital Mortgage Investment (MTGE) has been upgraded by TheStreet Ratings from Sell to Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMERICAN CAPITAL MTG INV CP (MTGE) 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 reasonable valuation levels, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and feeble growth in the company's earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 35.73% is the gross profit margin for AMERICAN CAPITAL MTG INV CP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 23.51% trails the industry average.
- MTGE, with its very weak revenue results, has greatly underperformed against the industry average of 9.1%. Since the same quarter one year prior, revenues plummeted by 58.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- AMERICAN CAPITAL MTG INV CP's earnings per share declined by 44.0% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, AMERICAN CAPITAL MTG INV CP swung to a loss, reporting -$1.58 versus $8.40 in the prior year. This year, the market expects an improvement in earnings ($2.64 versus -$1.58).
- 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 39.5% when compared to the same quarter one year ago, falling from $13.70 million to $8.29 million.
- You can view the full analysis from the report here: MTGE Ratings Report