NEW YORK (TheStreet) -- Tsakos Energy Navigation (TNP - Get Report) stock is tumbling on Thursday after the company announced it intends to offer 11 million shares of common stock in a public offering.
By market open, shares had tanked 11.9% to $7.36.
The company's largest shareholder, Tsakos Holdings Foundation, said affiliated entities would likely purchase up to 10% of common shares sold in the offering. Additionally, underwriters have been granted a 30-day option to purchase up to an additional 1.65 million common shares.
In a statement, the company said it plans to use net proceeds to "finance the expansion and
modernization of its fleet through its vessel acquisition program, including installment
payments on its existing crude oil carrier newbuilding program pursuant to its strategic
partnership with a well-known oil major."
Morgan Stanley, UBS and Wells Fargo are acting as joint book-running managers of the offering.
TheStreet Ratings team rates TSAKOS ENERGY NAVIGATION LTD as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate TSAKOS ENERGY NAVIGATION LTD (TNP) 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 revenue growth, solid stock price performance and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 7.6%. Since the same quarter one year prior, revenues slightly increased by 4.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to its closing price of one year ago, TNP's share price has jumped by 112.60%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- TSAKOS ENERGY NAVIGATION LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TSAKOS ENERGY NAVIGATION LTD continued to lose money by earning -$0.72 versus -$0.90 in the prior year. This year, the market expects an improvement in earnings ($0.28 versus -$0.72).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 45.9% when compared to the same quarter one year ago, falling from -$24.40 million to -$35.59 million.
- The debt-to-equity ratio of 1.38 is relatively high when compared with the industry average, suggesting a need for better debt level management.
- You can view the full analysis from the report here: TNP Ratings Report