Diamond Resorts (DRII) Stock Drops After Report Questions Business Practices

NEW YORK (TheStreet) -- Diamond Resorts  (DRII) stock is down by 9.78% to $20.10 in mid-morning trading on Monday, after a report questioned the company's business practices.

The Las Vegas-based hospitality company's sales practices can be "forceful" and the timeshare industry could face new regulation from the Consumer Financial Protection Bureau, the New York Times reports. The company also faces two lawsuits regarding its business practices.

"In my experience, Diamond is much more ambitious, aggressive and downright nasty in their sales presentations compared to Marriott and Westin," Jeff Weir, a Diamond timeshare owner, told the Times. "Diamond just has an amazing reputation of being tough on people."

However, the company has a "strict set of sales policies and practices aimed at protecting the consumer that are in-line with industry best practices," Diamond Resorts said in a letter to investors on Monday.
 
A 2015 survey showed that 88.1% of customers enjoyed their overall experience at Diamond's resorts, the company said. 
 
"Our company has a zero tolerance policy for any member of the sales team who does not follow protocol," the company added. 


Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

TheStreet Ratings rated this stock as a "hold" with a ratings score of C. 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 revenue growth, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself.

You can view the full analysis from the report here: DRII

DRII Chart DRII data by YCharts

More from Markets

Global Stocks Rebound But US-China Trade War Concerns Keep Investors on Edge

Global Stocks Rebound But US-China Trade War Concerns Keep Investors on Edge

Stocks Rise, GE Dropped From the Dow, Starbucks, Oracle - 5 Things You Must Know

Stocks Rise, GE Dropped From the Dow, Starbucks, Oracle - 5 Things You Must Know

Starbucks Slides After 'Unacceptable' Performance Leads to U.S. Store Closures

Starbucks Slides After 'Unacceptable' Performance Leads to U.S. Store Closures

REPLAY: Jim Cramer on How to Navigate the Stock Market Amid Tariff Worries

REPLAY: Jim Cramer on How to Navigate the Stock Market Amid Tariff Worries

Global Markets Hit Hard; AMC Entertainment Sells Stake in Ad Unit -- ICYMI

Global Markets Hit Hard; AMC Entertainment Sells Stake in Ad Unit -- ICYMI