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Why Alpha Resource Partners (ARP) Stock Is Down Today

Stocks in this article: ARP

NEW YORK (TheStreet) -- Atlas Resource Partners  (ARP) fell Friday after the oil and natural gas company priced a secondary public offering of common units.

The company priced 13.5 million common units at $19.90 apiece. The offer includes a 30-day option for underwriters to purchase up to an additional 2,025,000 common units. The company plans to use the proceeds to fund part of its previously-announced acquisition of oil assets in the Rangely Field in northwest Colorado, along with other general purposes that potentially include repaying outstanding borrowings under its revolving credit facility.

The stock was down 2.76% to $19.35 at 10:43 a.m. More than 7.4 million shares had changed hands, which eclipsed the average volume of 637,126.

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Separately, TheStreet Ratings team rates ATLAS RESOURCE PARTNERS LP as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate ATLAS RESOURCE PARTNERS LP (ARP) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, generally high debt management risk and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 111.5% when compared to the same quarter one year ago, falling from -$18.91 million to -$40.00 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ATLAS RESOURCE PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ATLAS RESOURCE PARTNERS LP is rather low; currently it is at 20.44%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -22.08% is significantly below that of the industry average.
  • ARP's debt-to-equity ratio of 0.88 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.44 is very low and demonstrates very weak liquidity.
  • The share price of ATLAS RESOURCE PARTNERS LP has not done very well: it is down 15.28% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • You can view the full analysis from the report here: ARP Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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