NEW YORK (TheStreet) -- Shares of First Bancorp (FBP) were falling 14.5% to $4.78 on heavy trading volume Tuesday, continuing losses from Monday following Puerto Rico Governor Alejandro García Padilla's comments that the commonwealth cannot pay its debts.
The commonwealth currently has about $72 billion in debt, according to The New York Times. The governor and members of his staff said the commonwealth would likely seek significant concessions from its creditors which could include deferring debt payments for as many as five years or extending the repayment timetable.
"The debt is not payable," García Padilla told the Times. "There is no other option. I would love to have an easier option. This is not politics, this is math."
The governor's comments brought down shares of Puerto Rican banks such as First Bancorp.
About 1.9 million shares of First Bancorp were traded by 10:52 a.m. Tuesday, above the company's average trading volume of about 880,000 shares a day.
TheStreet Ratings team rates FIRST BANCORP P R as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate FIRST BANCORP P R (FBP) 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 notable return on equity. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 50.1% when compared to the same quarter one year prior, rising from $17.08 million to $25.65 million.
- The gross profit margin for FIRST BANCORP P R is rather high; currently it is at 65.18%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, FBP's net profit margin of 14.93% significantly trails the industry average.
- FBP, with its decline in revenue, slightly underperformed the industry average of 0.0%. Since the same quarter one year prior, revenues slightly dropped by 0.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- FIRST BANCORP P R reported significant earnings per share improvement 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, FIRST BANCORP P R turned its bottom line around by earning $1.86 versus -$0.80 in the prior year. For the next year, the market is expecting a contraction of 81.7% in earnings ($0.34 versus $1.86).
- You can view the full analysis from the report here: FBP Ratings Report