NEW YORK (TheStreet) -- MBIA (MBI) shares are declining, down 6.22% to $9.17, after the reinsurance company's largest shareholder announced that it is cutting its stake in the company by more than half yesterday.
Global private equity investment firm Warburg Pincus LLC is selling 27.3 million shares in a public offering, leaving the company with 18.4 million shares. MBIA said that it will purchase about 8 million of its shares from the sale's underwriter.
Warburg's current 47.5 million stake is the largest of any other stakeholder in the company and nearly three times as much as the next largest, according to Bloomberg.
TheStreet Ratings team rates MBIA INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate MBIA INC (MBI) 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 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, generally higher debt management risk and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for MBIA INC is currently very high, coming in at 79.00%. Regardless of MBI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MBI's net profit margin of 31.50% significantly outperformed against the industry.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, MBIA INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- MBI, with its very weak revenue results, has greatly underperformed against the industry average of 7.8%. Since the same quarter one year prior, revenues plummeted by 64.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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 Insurance industry. The net income has significantly decreased by 73.0% when compared to the same quarter one year ago, falling from $256.00 million to $69.00 million.
- The debt-to-equity ratio is very high at 2.26 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
- You can view the full analysis from the report here: MBI Ratings Report