NEW YORK (TheStreet) -- Rentech (RTK - Get Report) was gaining 14.4% to $2.06 on news of a settlement agreement with Concerned Rentech Shareholders, and a $150 million investment from Blackstone's (BX - Get Report) GSO Capital Partners.
As part of the settlement with CRS the group will be able to approve a director Rentech nominates to its board of directors at its 2014 shareholders meeting. The wood fibre processor will also form a Finance Committee, which the CRS-approved director will be a part of.
Separately, Blackston Group's credit arm announced it will invest $150 in Rentech in return for two board seats.
TheStreet Ratings team rates RENTECH INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate RENTECH INC (RTK) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, compelling growth in net income and notable return on equity. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- RENTECH INC has improved earnings per share by 45.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, RENTECH INC turned its bottom line around by earning $0.00 versus -$0.06 in the prior year. This year, the market expects an increase in earnings to $0.08 from $0.00.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 40.8% when compared to the same quarter one year prior, rising from -$24.53 million to -$14.53 million.
- Compared to its price level of one year ago, RTK is down 8.54% to its most recent closing price of 1.93. Looking ahead, our view is that this company's fundamentals will not have much impact either way, allowing the stock to generally move up or down based on the push and pull of the broad market.
- The gross profit margin for RENTECH INC is currently extremely low, coming in at 5.08%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -18.33% is significantly below that of the industry average.
- The debt-to-equity ratio is very high at 2.67 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
- You can view the full analysis from the report here: RTK Ratings Report