NEW YORK (TheStreet) --Shares of American Realty Capital Properties Inc. (ARCP) are lower by 12.29% to $7.78 at the start of trading on Monday morning, after RCS Capital Corp. (RCAP) announced it has terminated its agreement to acquire Cole Capital Partners LLC and Cole Capital Advisors Inc. from America Realty.
RCS Capital did not offer a reason for canceling the previously disclosed definitive agreement.
However, the announcement comes as American Realty is facing an FBI investigation into the concealment of accounting errors on the part of the company, Bloomberg reports.
Last month, American Realty agreed to sell its "Cole Capital" business for $700 million, Bloomberg added.
Shares of RCS Capital are lower by 14.50% to $14.03 on Monday morning.
Separately, TheStreet Ratings team rates AMERICAN RLTY CAP PPTY INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate AMERICAN RLTY CAP PPTY INC (ARCP) 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, increase in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ARCP's very impressive revenue growth greatly exceeded the industry average of 9.1%. Since the same quarter one year prior, revenues leaped by 595.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 44.0% when compared to the same quarter one year prior, rising from -$71.96 million to -$40.33 million.
- AMERICAN RLTY CAP PPTY 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, AMERICAN RLTY CAP PPTY INC reported poor results of -$2.34 versus -$0.47 in the prior year. This year, the market expects an improvement in earnings (-$0.59 versus -$2.34).
- ARCP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 28.91%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The gross profit margin for AMERICAN RLTY CAP PPTY INC is currently extremely low, coming in at 6.89%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, ARCP's net profit margin of -10.55% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: ARCP Ratings Report