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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
Large Void Bot
19 Dec 14 16:00:08
Popular: $UWTI, $DRL
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19 Dec 14 15:09:52
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Cate Long
19 Dec 14 15:07:00
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19 Dec 14 15:03:29
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19 Dec 14 14:38:58
$VRNG and $DRL both just filed 8-Ks regarding issues with their exchange listing statuses
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19 Dec 14 14:18:44
Doral Financial sell assets for approximately $204.5 million. http://t.co/vncVGgeaX4 $DRL
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$DRL - Current Report Filing (8-k) http://t.co/DUgF32g6Io
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$DRL - Current Report Filing (8-k) http://t.co/7cqiYUuLBO
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$DRL - Current Report Filing (8-k) http://t.co/RSdMMAcaT4
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$DRL Doral Financial Corp files Form 8-K (Events or Changes Between Quarterly Reports) SEC Filing.. http://t.co/TaHRUlRf1O
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$DRL Doral Financial Corporation Document: 8-K From our Stock News Alerts App
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19 Dec 14 14:08:55
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Jacksonville Bancorp Inc (fl) (JAXB) Tops Small-Cap Stars Financials on December 19 $DRL $HMPR $MNRK $SFST $JAXB http://t.co/IT2ldGvuWf
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19 Dec 14 13:59:59
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19 Dec 14 13:46:13
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19 Dec 14 13:38:10
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19 Dec 14 12:25:05
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19 Dec 14 12:21:15
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19 Dec 14 12:19:07
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19 Dec 14 09:05:01
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19 Dec 14 08:47:40
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18 Dec 14 07:32:22
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17 Dec 14 14:59:17
RT @attivacapital: Come On! #DoralBank Investors Invoke #PuertoRico Pop Star Ricky Martin in Tax Fight http://t.co/g4G8sloTVX $DRL $TD http…
Americanbulls
17 Dec 14 14:53:09
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Márcia Fortes
17 Dec 14 14:22:07
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17 Dec 14 14:03:31
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17 Dec 14 13:56:06
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17 Dec 14 12:10:32
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17 Dec 14 11:46:14
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17 Dec 14 11:39:34
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StockTalk
17 Dec 14 07:57:10
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17 Dec 14 07:52:19
$DRL spiking with volume
MercadoMagico.com
17 Dec 14 07:31:15
RT @attivacapital: "@nytimes: U.S. and #Cuba to Start Talks on Normalizing Relations http://t.co/BkiYM4MalP" $SBSA $DRL $SNE should benefit…
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17 Dec 14 07:29:18
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i_like_bb_stock
17 Dec 14 07:04:29
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Americanbulls
16 Dec 14 15:14:58
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Americanbulls
16 Dec 14 15:13:17
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16 Dec 14 14:02:14
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Instaya
16 Dec 14 07:34:59
RT @attivacapital: Come On! #DoralBank Investors Invoke #PuertoRico Pop Star Ricky Martin in Tax Fight http://t.co/g4G8sloTVX $DRL $TD http…
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16 Dec 14 07:34:07
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David Razor
16 Dec 14 07:25:03
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16 Dec 14 07:23:43
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16 Dec 14 07:17:42
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EYLAF
16 Dec 14 06:12:11
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16 Dec 14 06:09:22
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  +Follow July 2, 2014 11:54AM
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