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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
Attiva Capital
24 Oct 14 15:05:22
@MattMonks123 @BloombergNews "Scotia has vehemently denied that they are selling the PR operation " http://t.co/90wtwwMjjD $BNS $DRL $BPOP
$Stocknewsalerts
24 Oct 14 14:00:05
$DRL Doral Financial Corporation Daily Stock Price Summary From our Stock News Alerts App
Christian Kat
24 Oct 14 12:50:03
$DRL Puerto Rico needs a financial control board https://t.co/yVnbQbGdqB
Attiva Capital
24 Oct 14 12:45:02
#PuertoRico needs financial control board @agarciapadilla Padilla is looking increasingly inept https://t.co/DW0TTxJDlX $DRL $BPOP $BNS $FBP
Eaglestar
24 Oct 14 11:38:05
RT @attivacapital: @marquezocasio Isn't Salomon Levis the one that started the whole mess at $DRL before new mgmt team took over? http://t.…
Enrique Márquez
24 Oct 14 11:34:08
RT @attivacapital: @marquezocasio Isn't Salomon Levis the one that started the whole mess at $DRL before new mgmt team took over? http://t.…
Attiva Capital
24 Oct 14 11:21:51
@marquezocasio Isn't Salomon Levis the one that started the whole mess at $DRL before new mgmt team took over? http://t.co/swUxImsT0B
Attiva Capital
24 Oct 14 11:18:55
$DRL has filed a $5 million lawsuit against a former chief financial officer alleging breach of contract http://t.co/T0dbuwIRJc $BPOP
Stocks News&Markets
24 Oct 14 08:20:41
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Christian Kat
24 Oct 14 06:38:59
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24 Oct 14 04:52:06
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24 Oct 14 03:41:13
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PhilCheeze
23 Oct 14 18:46:21
RT @jantenen: How can a REIT acquire bank branches? $DRL http://t.co/xJw82gRdVI
PhilCheeze
23 Oct 14 18:45:43
RT @attivacapital: $DRL Doral prepping to sell U.S. mainland operations??? http://t.co/C97CO3KJ40
Instaya
23 Oct 14 18:45:32
RT @PhilCheeze: @puertoricoguru @attivacapital @agarciapadilla $DRL will collect what is owed. US congress will see to it! Shorts are toas…
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23 Oct 14 16:00:02
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PhilCheeze
23 Oct 14 15:22:25
@puertoricoguru @attivacapital @agarciapadilla $DRL will collect what is owed. US congress will see to it! Shorts are toast here ~
$Stocknewsalerts
23 Oct 14 14:01:18
$DRL Doral Financial Corporation Daily Stock Price Summary From our Stock News Alerts App
Quantheta
23 Oct 14 14:00:03
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Jay Antenen
23 Oct 14 12:07:58
How can a REIT acquire bank branches? $DRL http://t.co/xJw82gRdVI
Attiva Capital
23 Oct 14 12:06:02
$DRL Doral prepping to sell U.S. mainland operations??? http://t.co/C97CO3KJ40
PhilCheeze
23 Oct 14 10:47:20
RT @attivacapital: Today we added $DRL again Doral 🏦 growth in mainland US Should mitigate risks related #PuertoRico subsidiary @agarciapa…
Attiva Capital
23 Oct 14 10:35:38
Today we added $DRL again Doral 🏦 growth in mainland US Should mitigate risks related #PuertoRico subsidiary @agarciapadilla @BacoFomento
Lauren Holmes
23 Oct 14 10:03:56
$DRL going down today with no strong buyers. We detail what hedge funds are trading here http://t.co/IhJaUAjPfb
PhilCheeze
23 Oct 14 10:03:12
RT @PoorButRich: $DRL Be greedy when others are fearful... :-)
Christian Kat
23 Oct 14 09:55:11
$DRL Be greedy when others are fearful... :-)
Hereitfirst
22 Oct 14 21:06:36
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Hereitfirst
22 Oct 14 21:06:01
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$Stocknewsalerts
22 Oct 14 14:02:13
$DRL Doral Financial Corporation Daily Stock Price Summary From our Stock News Alerts App
PhilCheeze
22 Oct 14 13:13:27
RT @laurenholmesNYC: $DRL how high it will go? check our thoughts here: http://t.co/IhJaUAjPfb
Buy High Sell Low
22 Oct 14 12:59:10
@autumnalcity87 and it stings the first time you see a +10k, get greedy, and then lose all of it (me and $DRL). Learn and fight another day
Lauren Holmes
22 Oct 14 09:58:28
$DRL how high it will go? check our thoughts here: http://t.co/IhJaUAjPfb
Hereitfirst
21 Oct 14 21:10:26
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21 Oct 14 21:09:39
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21 Oct 14 14:00:18
$DRL Doral Financial Corporation Daily Stock Price Summary From our Stock News Alerts App
PhilCheeze
21 Oct 14 12:08:44
RT @attivacapital: S&P : "If Puerto Rico loses the case ...a $45 million per year payout over five years -- would remain relatively small .…
PhilCheeze
21 Oct 14 12:08:40
RT @attivacapital: S&P: Puerto Rico Rating Unchanged On Doral $DRL Court Ruling
Attiva Capital
21 Oct 14 11:23:17
S&P: Puerto Rico Rating Unchanged On Doral $DRL Court Ruling
Attiva Capital
21 Oct 14 11:22:21
S&P : "If Puerto Rico loses the case ...a $45 million per year payout over five years -- would remain relatively small .." $DRL
Hereitfirst
20 Oct 14 22:13:59
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20 Oct 14 22:12:41
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Charlie Pryor
20 Oct 14 21:47:13
Looking for $RBCN $DRL and $VSR to all make some positive movements on news this week, perhaps. All unrelated stocks with great potential.
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20 Oct 14 14:01:01
$DRL Doral Financial Corporation Daily Stock Price Summary From our Stock News Alerts App
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20 Oct 14 14:00:03
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PhilCheeze
20 Oct 14 13:03:14
RT @Instaya: UPDATE 1-Puerto Rico mulls $2.5 bln debt sale to boost liquidity-sources #Finance http://t.co/QGGAwMOZXw … $DRL $FBP $BNS $SAN
Quantheta
20 Oct 14 12:00:03
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barna
20 Oct 14 11:56:56
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Instaya
20 Oct 14 11:49:44
UPDATE 1-Puerto Rico mulls $2.5 bln debt sale to boost liquidity-sources #Finance http://t.co/QGGAwMOZXw … $DRL $FBP $BNS $SAN
Instaya
20 Oct 14 11:47:21
The U.S. Environmental Protection Agency has awarded $26.8 million to Puerto Rico to help finance http://t.co/SAmBJYdU9m $DRL $FBP $BNS
				
				
  +Follow July 2, 2014 11:54AM
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