Rating Change #5
Enbridge Energy Partners LP
(EEP - Get Report)
has been upgraded by TheStreet Ratings from hold to buy. Among the primary strengths of the company is its respectable return on equity which we feel is likely to continue. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, ENBRIDGE ENERGY PRTNRS -LP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The revenue fell significantly faster than the industry average of 11.9%. Since the same quarter one year prior, revenues fell by 20.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- ENBRIDGE ENERGY PRTNRS -LP's earnings per share declined by 34.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ENBRIDGE ENERGY PRTNRS -LP turned its bottom line around by earning $1.89 versus -$1.08 in the prior year. For the next year, the market is expecting a contraction of 30.7% in earnings ($1.31 versus $1.89).
- The gross profit margin for ENBRIDGE ENERGY PRTNRS -LP is currently lower than what is desirable, coming in at 26.50%. Regardless of EEP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.40% trails the industry average.
- After a year of stock price fluctuations, the net result is that EEP's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Despite the stock's decline during the last year, it is still somewhat more expensive (in proportion to its earnings over the last year) than most other stocks in its industry. We feel, however, that other strengths this company displays offset this slight negative.
Enbridge Energy Partners, L.P. owns and operates crude oil and liquid petroleum transportation and storage assets, as well as natural gas gathering, treating, processing, transmission, and marketing assets in the United States. The company has a P/E ratio of 16.2, equal to the average energy industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Enbridge Energy has a market cap of $7.18 billion and is part of the
industry. Shares are down 9.1% year to date as of the close of trading on Tuesday.
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