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Doral Financial Wins Appellate Case, Shares Skyrocket

  +Follow July 2, 2014 11:54AM
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.

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Results for DRL
25 Nov 14 13:59:57
$DRL Doral Financial Corporation Daily Stock Price Summary From our Stock News Alerts App
Mexican Trades
25 Nov 14 09:59:51
Bull Logic
25 Nov 14 08:47:41
$DRL continues upward
Bull Logic
25 Nov 14 07:47:32
$DRL Highs on low volume
Bull Logic
25 Nov 14 07:16:04
$DRL green
Bull Logic
25 Nov 14 05:26:32
$DRL Commonwealth has till Jan 3 to appeal. Turned down allready. #payupandshutup
Vaulty Boy
25 Nov 14 04:53:21
If long on $drl be careful. Yest had a bearish engulfing pattern.
24 Nov 14 19:27:03
Hot in Twitter About $DRL (Doral Financial Corp symbol DRL) on 11/25/2014 http://t.co/s4e4PDmugg
24 Nov 14 14:03:27
$DRL Doral Financial Corporation Daily Stock Price Summary From our Stock News Alerts App
Bull Logic
24 Nov 14 11:50:38
$DRL easy manipulation took out stops. Enjoy boys. Long.
Vaulty Boy
24 Nov 14 11:37:18
$MILL nice push if closes above 3.25ish will long it before close. $DRL pulling back as expected (if no b/o) I am swinging it stop at 5.20
Bull Logic
24 Nov 14 09:39:03
$DRL pr must be shorting...
Bull Logic
24 Nov 14 09:32:34
$DRL flipper beat down. Needs more cowbell
Vaulty Boy
24 Nov 14 09:32:07
$DRL if I am wrong will take it off around 5.20ish for a small loss
Vaulty Boy
24 Nov 14 09:31:17
$DRL got filled at 5.54, risk 5.20ish. true b/o is at 5.60. until then it is just anticipating. IMO that is where s/s will cover and squeeze
Vaulty Boy
24 Nov 14 09:22:26
$THRX nice run .33c so far since my 14.50ish alert. very nice! will watch for a pullback on it! waiting on $DRL to b/o 5.55.
Vaulty Boy
24 Nov 14 08:59:47
$DRL buy 5.53 risk 5.20 nice stock, like the price action so far! DRL is a former runner! http://t.co/MwNGRhkLra
Bull Logic
24 Nov 14 08:29:32
$DRL could be news coming big volume pop
Bull Logic
24 Nov 14 08:27:45
$DRL highs get ready!!
Bull Logic
24 Nov 14 08:21:08
$DRL sell now buy back higher imo pr will pay up
CC Investments
24 Nov 14 07:43:52
Our analysts anticipate a $DRL run in the coming weeks. FDIC compliance on the horizon. Stay tuned.
Bull Logic
24 Nov 14 07:38:26
$DRL highs
Bull Logic
24 Nov 14 07:25:05
$DRL low float could rip with some volume
23 Nov 14 17:39:51
@KnightsOfWallST final judgement by the courts came in weeks ago, $DRL WON ! PR Govt Stall tactics on payment will not go on for very long
Knights of Wall ST
23 Nov 14 17:38:15
@PhilCheeze when is the final judgement? $drl
23 Nov 14 09:35:49
@WeeklyReversal @FioritoJarrad agreed. $DRL is ready to run hard. #PRGOVTLOSTINCOURT #DoralWins
23 Nov 14 09:34:14
RT @WeeklyReversal: @FioritoJarrad hat tip of the week goes to $DRL long after nice consolidation and now accumulation to reverse..lol on w…
22 Nov 14 22:24:55
@FioritoJarrad hat tip of the week goes to $DRL long after nice consolidation and now accumulation to reverse..lol on watch
22 Nov 14 17:45:39
22 Nov 14 17:45:22
RT @BullLogic: $DRL Chart looks good. Holding for payday. #yourgonnachase
21 Nov 14 16:31:54
$DRL Doral Financial Corporation Daily Stock Price Summary From our Stock News Alerts App
21 Nov 14 15:39:29
$DRL Very Nice Day Today ~ http://t.co/ylKFOCVii6
Bull Logic
21 Nov 14 14:27:42
$DRL Chart looks good. Holding for payday. #yourgonnachase
21 Nov 14 14:00:23
$DRL Doral Financial Corporation Daily Stock Price Summary From our Stock News Alerts App
21 Nov 14 11:31:58
@BullLogic still stalling. $DRL will get the money soon. PR lost fair and square. Uncle Sam won't allow any more funny business from PR ~
Bull Logic
21 Nov 14 10:53:15
$DRL PR gonna pay up this weekend???
Bull Logic
21 Nov 14 10:52:39
RT @PhilCheeze: @puertoricoguru nah. $DRL run to $12-$15 PPS on the way. #USGOVTWILLMAKEPRGOVTPAYDORAL
Bull Logic
21 Nov 14 10:13:18
Media Sentiment
21 Nov 14 10:00:00
$DRL received a new alert. Find out why at http://t.co/5lwmDm2SCs #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 264
21 Nov 14 09:57:36
$DRL up 2% to $5.50 and looking good for a breakout with squeezing bollinger bands on the daily ~
21 Nov 14 09:54:34
RT @bman_alerts: $DRL chart
Stock Sensation
21 Nov 14 08:46:27
21 Nov 14 08:18:38
$DRL chart
21 Nov 14 06:27:58
RT @GoldenGlobeGGA: $DRL looks ready for a serious run................
21 Nov 14 06:18:22
$DRL looks ready for a serious run................
20 Nov 14 21:01:08
RT @chartseer: $DRL http://t.co/ayQBdz7cIR
20 Nov 14 21:01:02
RT @attivacapital: "@sa_article: Doral Financial Corporation: Potential For A Preferred/Common Swap. http://t.co/1Swr0yBnAR $DRL"
20 Nov 14 21:00:44
RT @MexicanTrades: $DRL looking sexy.
GC Trader
20 Nov 14 19:39:28
20 Nov 14 14:00:47
$DRL Doral Financial Corporation Daily Stock Price Summary From our Stock News Alerts App
  +Follow July 2, 2014 11:54AM



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