Shares plummeted by more than 40% yesterday, as the company's CFO Jamie Welch will depart in the midst of its proposed merger with Williams Cos. (WMB).
"Having the CFO leave before the deal closes, maybe before the financing deal closes, looks pretty bad," Jay Rhame, who co-manages $2.5 billion in utilities and energy infrastructure at Reaves Asset Management, told the Wall Street Journal. "So I think people are looking at a pretty low probability on the deal actually closing. I think it probably points to bigger problems than what's publicly known right now."
Investors have worried that tumbling oil prices will negatively impact Energy Transfer's ability to afford the $6 billion in debt it will take out to help pay for Williams Cos., and Liam Denning a columnist on Bloomberg Gadfly, wondered if Welch's departure indicates buyer's remorse.
Williams' shareholders will own about half of the combined company's equity, and Welch's departure and the subsequent decline in shares could therefore help Energy Transfer get out of the current deal, Denning wrote.
Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C.
Energy Transfer Equity's strengths such as its impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations are countered by weaknesses including a generally disappointing performance in the stock itself and poor profit margins.
You can view the full analysis from the report here: ETE
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.