NEW YORK (TheStreet) -- Abengoa Yield (ABY) stock is dropping by 11.40% to $15.08 on Wednesday morning, after the company's partner announced that the industrial group Gonvarri Steel Industries dropped its investment plans.
Based in the United Kingdom, Abengoa Yield is an engineering and clean technology company. The company has a sales partnership with AbengoaSA (ADR), which is a Spain-based company that provides services to the engineering sector.
Gonvarri was going to invest about $374 million in Abengoa SA, the company announced earlier this month.
The company will now continue negotiations with creditors to reach an agreement that ensure's the company's financial viability, Abengoa SA said in a statement today.
Abengoa SA stock is falling 47.75% to $2.48 in mid-morning trading on Wednesday.
Separately, TheStreet Ratings team rates ABENGOA YIELD PLC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
We rate ABENGOA YIELD PLC (ABY) 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 generally disappointing historical performance in the stock itself and generally high debt management risk.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ABY's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 36.05%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- The debt-to-equity ratio is very high at 3.14 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, ABY has managed to keep a strong quick ratio of 1.54, which demonstrates the ability to cover short-term cash needs.
- The gross profit margin for ABENGOA YIELD PLC is currently very high, coming in at 74.17%. Regardless of ABY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.05% trails the industry average.
- Compared to other companies in the Independent Power Producers & Energy Traders industry and the overall market on the basis of return on equity, ABENGOA YIELD PLC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- Net operating cash flow has significantly increased by 134.13% to $157.98 million when compared to the same quarter last year. In addition, ABENGOA YIELD PLC has also vastly surpassed the industry average cash flow growth rate of -39.78%.
- You can view the full analysis from the report here: ABY
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.