NEW YORK (TheStreet) -- Pike (PIKE) soared Monday after the energy company agreed to let investment firm Court Square Capital Partners take it private in a deal that values Pike at approximately $383 million.
The agreement, which should close in the second quarter next year, includes a 30-day period in which Pike can look for another offer. Pike's board unanimously supported the bid, which represented a 50% premium to Friday's closing price of $7.96.
The stock was up 48.87% to $11.85 at 10:07 a.m. More than four million shares had changed hands, compared to the average volume of 168,331.
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Separately, TheStreet Ratings team rates PIKE CORP as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate PIKE CORP (PIKE) 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, increase in net income and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 13.4%. Since the same quarter one year prior, revenues slightly increased by 3.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Construction & Engineering industry average. The net income increased by 5.0% when compared to the same quarter one year prior, going from $2.69 million to $2.83 million.
- PIKE's debt-to-equity ratio of 0.94 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. Despite the fact that PIKE's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.49 is high and demonstrates strong liquidity.
- The gross profit margin for PIKE CORP is rather low; currently it is at 17.36%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.36% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$9.95 million or 134.36% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: PIKE Ratings Report