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Doral Financial Wins Appellate Case, Shares Skyrocket

  +Follow July 2, 2014 11:54AM
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small-cap stocks, small-cap stars, stocks to buy now, Doral Financial stock

On July 2 Doral Financial (DRL) saw shares surge more than 70 percent at one point before backing off slightly on a decisive court victory over the government of Puerto Rico.

In a statement to stockholders, Doral claimed an appellate court had overturned an earlier ruling that favored Puerto Rico in the ongoing war over a whopping $230 million in tax refunds Doral claims they are still owed. The Puerto Rican government has tried to nullify this repayment, and Doral’s challenge had been previously thrown out by a lower court over jurisdiction issues.

Doral In Dire Straits

While $230 million in tax refunds is welcomed by any company, the cash-strapped Doral is in especial need of the funds. The lender has struggled to maintain a sufficient amount of Tier 1 capital as required by banks in the wake of the 2008 financial meltdown. An accounting discrepancy of Doral’s, in which the lender was cited for using inappropriate assets in their capital requirements, exacerbated the bank’s shortfall.

Doral has claimed that if push comes to shove they can sell assets to meet their requirements. But that is a scenario the company’s beleaguered stockholders would definitely not like to see.  

In an effort to shore up their reserves while satiating their shareholder’s interests, Doral has been aggressive in their quest for the $230 million in total they feel they are owed. Unsurprisingly, San Juan has been loath to pay the money back, and has repeatedly tried to stonewall them through a lengthy court battle.

As the battle has see-sawed between Doral and the Puerto Rican government’s favor, so has Doral’s stock.  Shares of the lender have whipsawed. Shares went from $3 to $5 a share from June 3 to June 10 on the heels of a major victory in the Puerto Rico Supreme Court. After the bounce though, shares plummeted near the $4 range, but then popped again on the July 2 ruling to above $6.50. Even after the recovery, the company’s stock is still down 60 percent in 2014.

A Deeper Look at Doral

 Despite their woes, as an investment Doral still maintains some promising fundamentals. According to the equities.com EVA reports, Doral’s Net Margin is much higher than the industry average, which ia a very positive sign for the company. Doral’s return on equity (ROE) is also higher than average, indicating that the company is not overleveraged in comparison to its peers.

For the near-term future however, investors will be looking less at fundamentals and more at the decisions made by the Puerto Rican courts. If their home government is indeed on the hook for such a massive repayment, Doral’s shares will be sure to skyrocket.

Of course, the reverse is true, and if Doral does not reclaim the taxes they claim they overpaid, they will be forced to liquidate assets, and the company’s stockholders will be in store for some pretty significant losses.

By 3 PM EST shares of Doral were trading at $6.46 a share, representing a gain of 60.3% on the day.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for DRL
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15 Sep 14 16:55:51
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ENGIN BUYUKARSLAN
15 Sep 14 16:04:21
@FrimLLC yes earning of $fonr is great after hours. Good solid company. Also watch $avnr $isns $drl $rwlk $baba $yhoo
John Giangreco
15 Sep 14 14:11:15
RT @petedoom: $DRL Lawyer sounding pretty dang confident PR GOV'T is toast. Trial is Wednesday. Guess we'll find out soon!
$Stocknewsalerts
15 Sep 14 14:02:34
$DRL Doral Financial Corporation Daily Stock Price Summary From our Stock News Alerts App
microcaptrader
15 Sep 14 13:41:47
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pete doom
15 Sep 14 13:41:39
$DRL Lawyer sounding pretty dang confident PR GOV'T is toast. Trial is Wednesday. Guess we'll find out soon!
aziz saba
15 Sep 14 13:38:47
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PR Guru
15 Sep 14 13:26:55
$DRl denies link to ‘smear campaign’ - Caribbean Business http://t.co/xi2UtPs6nV
pete doom
15 Sep 14 13:09:26
RT @Junno23: McGill Press Release http://t.co/sTHBL2Nu0A $DRL Doral Bank Case...
pete doom
15 Sep 14 13:09:14
RT @Junno23: $DRL "We will prove our case in court this week with evidence—not a smear campaign,” said Mathew D. McGil
PennyStock Zone
15 Sep 14 13:06:14
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Papo Finura
15 Sep 14 12:52:53
$DRL "We will prove our case in court this week with evidence—not a smear campaign,” said Mathew D. McGil
ENGIN BUYUKARSLAN
15 Sep 14 12:49:35
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Papo Finura
15 Sep 14 12:48:35
McGill Press Release http://t.co/sTHBL2Nu0A $DRL Doral Bank Case...
Think Puerto Rico
15 Sep 14 12:33:28
RT @Bidnessetc: Doral Financial is up 10% today, following the announcement of the sale of its mortgages to Barclays http://t.co/Z3S6qL0fMe…
DON
15 Sep 14 12:01:42
RT @StockPicksNYC: $DRL now at $7.20 nice volume
PR Guru
15 Sep 14 11:56:55
Govt. "people should withdraw money from $DRL " - Tildan de asqueante campaña contra Gob. http://t.co/MyKg8xtRBL @elnuevodia #doral
Christian Katczynski
15 Sep 14 10:42:38
$DRL Wouldn't it be great if we could go back to Nov 2004? USD 19780 :-) -> long
pete doom
15 Sep 14 10:35:03
$DRL is such a crazy stock. You blink & it can move a dollar, Haha. Good news on WEDs sends this into Orbit. Bad news the opposite.
John Giangreco
15 Sep 14 10:28:12
RT @petedoom: Statement from $DRL lawyer Mathew McGill. Sounding pretty confident. Price will soar or plummet this week.... http://t.co/…
pete doom
15 Sep 14 10:23:13
Statement from $DRL lawyer Mathew McGill. Sounding pretty confident. Price will soar or plummet this week.... http://t.co/08kCpjNyei
PR Guru
15 Sep 14 10:02:31
New Statement from Mathew D. McGill, $DRL Legal Counsel Ahead of This Week’s Trial http://t.co/Byn8SlvPEK
PhilCheeze
15 Sep 14 09:06:48
RT @DailyContracts: Real-Time feed of company contracts, original agreements and executive updates from Doral Financial Corporation $DRL ht…
Big Money
15 Sep 14 09:06:38
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St. Louis Blues 2015
15 Sep 14 08:17:15
$DRL still a three dollar stock if nothing happens. Said it before, will say it again. Dump this trash now #bearish
Daily Contracts
15 Sep 14 08:01:02
Real-Time feed of company contracts, original agreements and executive updates from Doral Financial Corporation $DRL http://t.co/oLSimPKtp9
PR Guru
15 Sep 14 07:02:49
Politicians not happy with $DRl 's media campaign. Cuestionan interés de organización en pleito legal de Doral http://t.co/XJzpACZaqj
ENGIN BUYUKARSLAN
15 Sep 14 06:54:11
Market is red, not good start to week, I am out from $drl and any other stocks now, I will just wait for news!
Colin Macleod
15 Sep 14 05:55:18
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Charts 123
15 Sep 14 03:52:02
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15 Sep 14 03:32:31
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15 Sep 14 03:28:59
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Van Dinh
14 Sep 14 23:45:57
RT @King_Of_Trades: @King_Of_Trades My $FCEL short/swing idea is working well so far. Watching $JRJC $DRL $DGLY $TC $SYN $MNDL $INVT $SPY h…
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ENGIN BUYUKARSLAN
14 Sep 14 18:20:14
@joeybagabagels @puertoricoguru $drl Contract is real which indicated current Gov. Sign. If it was not real Gov. Would not tried delay court
Joey Bagadonuts
14 Sep 14 18:07:24
@puertoricoguru even if contract is null, burden of proof now pertains to fraud. That ship has already sailed for PR. $drl
Roberto Flores
14 Sep 14 17:56:06
RT @StockPicksNYC: $DRL now at $7.20 nice volume
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14 Sep 14 17:40:49
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14 Sep 14 16:38:04
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14 Sep 14 16:19:44
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PhilCheeze
14 Sep 14 14:45:27
RT @EBUYUKARSLAN: This week buying suggest: $drl (big chance for double 100%_ News) $feye($40) , $baba(Watch closely ) , $dgly or $tasr, $t…
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14 Sep 14 13:59:35
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John Giangreco
14 Sep 14 13:28:30
RT @EBUYUKARSLAN: This week buying suggest: $drl (big chance for double 100%_ News) $feye($40) , $baba(Watch closely ) , $dgly or $tasr, $t…
ENGIN BUYUKARSLAN
14 Sep 14 12:25:34
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RUCASO
13 Sep 14 17:14:58
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13 Sep 14 12:15:51
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ENGIN BUYUKARSLAN
13 Sep 14 11:27:47
RT @PhilCheeze: $DRL Massive Move up coming from $6-$7 now to $12-$16 PPS IMO ~
				
				
  +Follow July 2, 2014 11:54AM
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