NEW YORK (TheStreet) -- Atlantic Power (AT) - Get Report hit a one-year low of $2.22 on Monday as Moody's downgraded the company's ratings, including the Corporate Family Rating to B2 from B1.

The stock closed at $2.42, down 8.49% or 23 cents from its previous close of $2.65. It had a volume of 5.5 million, nearly four times its average of 1.38 million. The stock hit a high of $2.72 for the day and has a one-year high of $12.29.

Moody's also lowered the Probability of Default Rating to B2-PD from B1-PD and changed Senior Unsecured Notes to B3 from B2.

"The downgrade is driven by the increased debt load stemming from the new $600 million term loan at APLP," the Moody's report states. "We now expect CFO pre-W/C to debt at AT toward the lower end of the previously stated range of 4-7% over the next twelve to eighteen months. The term loan contains a 50% cash sweep on projects under APLP, constraining upstream distributions to the parent who continues to pay a sizable dividend to shareholders."

TheStreet Ratings team rates ATLANTIC POWER CORP as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate ATLANTIC POWER CORP (AT) a SELL. This is driven by some concerns, 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 feeble growth in its earnings per share, deteriorating net income, generally high debt management risk and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • ATLANTIC POWER CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, ATLANTIC POWER CORP reported poor results of -$1.10 versus -$0.39 in the prior year.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Independent Power Producers & Energy Traders industry. The net income has significantly decreased by 452.0% when compared to the same quarter one year ago, falling from -$7.50 million to -$41.40 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 75.65%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 54.54% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The debt-to-equity ratio is very high at 3.02 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, AT's quick ratio is somewhat strong at 1.05, demonstrating the ability to handle short-term liquidity needs.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Independent Power Producers & Energy Traders industry and the overall market, ATLANTIC POWER 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: AT Ratings Report