NEW YORK (TheStreet) -- PetroLogistics (PDH) shares are climbing, up 9.44% to $14.20, following news that a Koch Industries is purchasing the company for $2.1 billion.
The Houston-based propylene maker has reportedly agreed to terms with Koch Industries subsidiary Flint Hill Resources which will pay $14 for each outstanding share and $12 for each common share owned by Executive Chairman David Lumpkins, CEO Nathan Ticatch, Lindsay Goldberg LLC, York Capital Management. The group owns 73% of the company's shares.
The company expects to make quarterly distributions until the close of the deal which is expected later this year.
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TheStreet Ratings team rates PETROLOGISTICS LP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate PETROLOGISTICS LP (PDH) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 11.3%. Since the same quarter one year prior, revenues slightly increased by 5.4%. 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.
- 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 Chemicals industry and the overall market, PETROLOGISTICS LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has significantly increased by 70.89% to $48.56 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 37.07%.
- PETROLOGISTICS LP's earnings per share declined by 19.5% in the most recent quarter compared to 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, PETROLOGISTICS LP turned its bottom line around by earning $1.24 versus -$0.41 in the prior year. This year, the market expects an improvement in earnings ($1.38 versus $1.24).
- The debt-to-equity ratio of 1.08 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, PDH has managed to keep a strong quick ratio of 1.87, which demonstrates the ability to cover short-term cash needs.
- You can view the full analysis from the report here: PDH Ratings Report