NEW YORK (TheStreet) -- Shares of StoneMor Partners (STON) - Get Report were falling 5.3% to $29.52 after-hours Monday after the cemetery and funeral home operator announced a new public offering.

The company announced it will sell 2.1 million shares of common stock in a public offering. StoneMor will grant the underwriters of the offering a 30-day option to buy up to 315,000 additional shares to cover any over-allotments.

The company said it will use the proceeds from the offering, including any additional proceeds from the underwriters exercising their option, to pay down outstanding indebtedness under its revolving credit facility.

Raymond James (RJF) - Get Report will serve as the book runner for the public offering. Janney Montgomery Scott and Wunderlich will serve as senior co-managers with BB&T Capital Markets (BBT) - Get Report and Ladenburg Thalmann  (LTS) - Get Report serving as co-managers.

TheStreet Ratings team rates STONEMOR PARTNERS LP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate STONEMOR PARTNERS LP (STON) 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, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and feeble growth in the company's earnings per share."

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

  • STON's revenue growth has slightly outpaced the industry average of 1.9%. Since the same quarter one year prior, revenues slightly increased by 4.7%. 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.
  • Compared to its closing price of one year ago, STON's share price has jumped by 30.21%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • 46.53% is the gross profit margin for STONEMOR PARTNERS LP which we consider to be strong. Regardless of STON's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, STON's net profit margin of -13.17% significantly underperformed when compared to the industry average.
  • Currently the debt-to-equity ratio of 1.69 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Regardless of the company's weak debt-to-equity ratio, STON has managed to keep a strong quick ratio of 1.75, which demonstrates the ability to cover short-term cash needs.
  • 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 Diversified Consumer Services industry. The net income has significantly decreased by 2271.9% when compared to the same quarter one year ago, falling from $0.41 million to -$8.88 million.
  • You can view the full analysis from the report here: STON Ratings Report