logo
Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?

Register
    

 


Doral Financial Wins Appellate Case, Shares Skyrocket

  +Follow July 2, 2014 11:54AM
Share:
Tickers Mentioned:

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. To read our full disclosure, please go to: http://www.equities.com/disclaimer


Liked What You Read? Join Equities.com and Connect With Your Favorite Financial Experts FOR FREE! Members of Equities.com gain access to our leading financial news and content, active social investment community, proprietary research tools including the 2014 Small-Cap Stars, E.V.A. reports and more.

Results for DRL
Stocks News&Markets
3 Aug 15 10:20:40
Nate made $2,577 on $DRL -Check it out! http://t.co/IonDz5be8z Learn #howtotrade http://t.co/axK8SMSgo9 $GAI $LXRX $WRES $USEG $DRWI
Spartan Stocks
3 Aug 15 07:14:04
$DRL crash should have been the most obvious play of the day little annoyed i wasn't on that immediately
Daily Contracts
3 Aug 15 07:09:05
Real-Time feed of company contracts, original agreements and executive updates from $DRL http://t.co/tClclcWOsk
Daily Contracts
30 Jul 15 14:58:02
Real-Time feed of company contracts, original agreements and executive updates from $DRL http://t.co/tClclcWOsk
DailyStockPicks
29 Jul 15 09:19:26
$OCLS $OCLSW break out up 10% today. Price target of $5 $LGND $DBD $LOCK $AHGP $DRL $UFI investors read http://t.co/rWpJvFmAFr
Daily Contracts
29 Jul 15 07:44:02
Real-Time feed of company contracts, original agreements and executive updates from $DRL http://t.co/tClclcWOsk
Penny Stock Secret
27 Jul 15 23:48:21
$71,000 in ONE TRADE!! By Follwing Their Signals More Info Here http://t.co/SVqoMkrw2z .. $DRII $DRL $DRQ
				
				
  +Follow July 2, 2014 11:54AM
Share:

Comments

 

blog comments powered by Disqus

 Today's Must Reads

Beyond Twitter: 5 Small-Cap Tech Plays Nobody’s Talking About


Will the Fed Continue Its Track Record of Unprecedented Moves?

Facebook versus Google: Who Rules the Internet?

Are These the Worst Business Documentaries on Netflix?


Saving the

Small-Cap Market

 

Small-cap stocks offer investors many benefits, ranging from higher growth potential to overlooked value opportuni... in Equities.com's Hangs on LockerDome

About us

Equities.com is an advanced financial data portal and social network designed to connect self-directed investors with the world’s most innovative startup and small cap companies. Through our in-depth coverage of small cap markets, comprehensive research and stock valuation reports, state of the art issuer products, and world class events, Equities.com provides the social tools and insight that drive tomorrow’s investment relationships and opportunities.

Market Data powered by QuoteMedia.
Copyright © QuoteMedia. Data delayed 15 minutes unless otherwise indicated. Terms of Use.

Login or Register

LOG IN