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Regency Energy Partners LP Stock Upgraded (RGNC)

NEW YORK (TheStreet) -- Regency Energy Partners (Nasdaq:RGNC) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • REGENCY ENERGY PARTNERS LP reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, REGENCY ENERGY PARTNERS LP swung to a loss, reporting -$0.16 versus $1.64 in the prior year. This year, the market expects an improvement in earnings ($0.70 versus -$0.16).
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The current debt-to-equity ratio, 0.34, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.77 is somewhat weak and could be cause for future problems.
  • Net operating cash flow has increased to $41.30 million or 12.09% when compared to the same quarter last year. In addition, REGENCY ENERGY PARTNERS LP has also modestly surpassed the industry average cash flow growth rate of 11.46%.
  • RGNC's revenue growth has slightly outpaced the industry average of 12.0%. Since the same quarter one year prior, revenues rose by 14.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.

Regency Energy Partners LP engages in the gathering, treating, processing, compression, and transportation of natural gas and natural gas liquids (NGLs). Regency Energy has a market cap of $3.8 billion and is part of the basic materials sector and energy industry. Shares are up 1.4% year to date as of the close of trading on Thursday.

You can view the full Regency Energy Ratings Report or get investment ideas from our investment research center.

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