NEW YORK (TheStreet) -- Shares of Integrys Energy Group (TEG) are soaring 11.57% to $68.00 in pre-market trading on Monday morning after Wisconsin Energy (WEC - Get Report) announced it will acquire the company for $9.1 billion in cash, stock and assumed debt.
The merger has been unanimously approved by both boards of both companies, and will create the 8th largest natural gas distribution company in America.
TheStreet Ratings team rates INTEGRYS ENERGY GROUP INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate INTEGRYS ENERGY GROUP INC (TEG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and increase in stock price during the past year. 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:
- TEG's very impressive revenue growth greatly exceeded the industry average of 7.8%. Since the same quarter one year prior, revenues leaped by 74.3%. 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 debt-to-equity ratio is somewhat low, currently at 0.99, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- INTEGRYS ENERGY GROUP INC's earnings per share declined by 17.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, INTEGRYS ENERGY GROUP INC increased its bottom line by earning $4.34 versus $3.68 in the prior year. For the next year, the market is expecting a contraction of 18.2% in earnings ($3.55 versus $4.34).
- You can view the full analysis from the report here: TEG Ratings Report