New Residential Investment (NRZ) Stock Down After Pricing Stock Offering

NEW YORK (TheStreet) --Shares of New Residential Investment Corp. (NRZ) are falling by 4.30% to $15.91 on heavy volume at the start of trading on Wednesday morning, after the company announced the pricing of a public offering of common stock.

The real estate investment trust priced its public offering of over 31 million shares of common stock for gross proceeds of approximately $505 million.

So far today 5.15 million shares of New Residential Investment have exchanged hands as compared to its average daily volume of 2.86 million shares.

The company has granted underwriters an option for 30 days to purchase up to an additional 4.7 million shares of common stock.

Bank of America/Merrill Lynch (BAC), Citigroup (C), and JPMorgan (JPM) are the joint book-running managers for the offering. The offering is expected to close on June 15.

Separately, TheStreet Ratings team rates NEW RESIDENTIAL INV CP as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

"We rate NEW RESIDENTIAL INV CP (NRZ) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, weak operating cash flow and feeble growth in its earnings per share."

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

  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income has significantly decreased by 26.2% when compared to the same quarter one year ago, falling from $48.77 million to $35.98 million.
  • Net operating cash flow has significantly decreased to -$18.59 million or 1000.72% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • NEW RESIDENTIAL INV CP's earnings per share declined by 34.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, NEW RESIDENTIAL INV CP increased its bottom line by earning $2.52 versus $1.96 in the prior year. For the next year, the market is expecting a contraction of 22.2% in earnings ($1.96 versus $2.52).
  • 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, NEW RESIDENTIAL INV CP's return on equity exceeds that of both the industry average and the S&P 500.
  • NRZ, with its decline in revenue, underperformed when compared the industry average of 8.5%. Since the same quarter one year prior, revenues slightly dropped by 8.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: NRZ Ratings Report

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