NEW YORK (TheStreet) -- Penn Virginia (PVA - Get Report) was gaining 1.3% to $14.29 Wednesday after pricing a private offering of $275 million of depositary shares representing convertible preferred stock.
Penn Virginia priced the 2.75 million depositary shares at $100 a depositary share. Each depositary share represents a 1/100th interest in a share of 6.00% Convertible Perpetual Preferred Stock, Series B. The company granted initial purchasers a 30-day option to buy up to an additional 500,000 depositary shares.
Penn Virginia expects net proceeds of about $264.2 million from the offering. The company will use the proceeds to finance the acceleration of its development program in the Eagle Ford Shale.
TheStreet Ratings team rates PENN VIRGINIA CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate PENN VIRGINIA CORP (PVA) 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 robust revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- PVA's very impressive revenue growth greatly exceeded the industry average of 3.1%. Since the same quarter one year prior, revenues leaped by 58.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 166.66% and other important driving factors, this stock has surged by 213.26% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.
- PENN VIRGINIA CORP reported significant earnings per share improvement 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, PENN VIRGINIA CORP reported poor results of -$2.36 versus -$2.14 in the prior year. This year, the market expects an improvement in earnings (-$0.05 versus -$2.36).
- Currently the debt-to-equity ratio of 1.57 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, PVA has a quick ratio of 0.69, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- 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, PENN VIRGINIA CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: PVA Ratings Report