NEW YORK (TheStreet) -- Shares of Blueknight Energy Partners (BKEP) - Get BlueKnight Energy Partners LP LLC Report are down 0.79% to $7.55 in after-hours trading following the commencement of an underwritten public offering of 8.5 million common units representing limited partner interests of the partnership. 

The company is a limited partnership providing terminalling storage, processing, gathering and transportation services, and it wiill also grant the underwriters a 30-day option to purchase up to 1.275 million additional common units.

The partnership intends to use the net proceeds from the offering, including any net proceeds from the underwriters' exercise of their option to purchase additional common units, for general partnership purposes, including the repayment of a portion of the outstanding borrowings under the Partnership's credit facility and partially funding the Partnership's Eaglebine pipeline project.

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Wells Fargo Securities (WFC) - Get Wells Fargo & Company Report , RBC Capital Markets and Bank of America/Merrill Lynch (BAC) - Get Bank of America Corp Report will act as joint book-running managers for the offering. Stephens Inc. and SunTrust Robinson Humphrey will act as co-managers for the offering.

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Shares of Blueknight were down 8.86% to $7.61 at closing.

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

"We rate BLUEKNIGHT ENERGY PRTNRS LP (BKEP) 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, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and weak operating cash flow."

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

  • BKEP's revenue growth has slightly outpaced the industry average of 3.0%. Since the same quarter one year prior, revenues slightly increased by 0.3%. 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.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, BLUEKNIGHT ENERGY PRTNRS LP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • 38.81% is the gross profit margin for BLUEKNIGHT ENERGY PRTNRS LP which we consider to be strong. Regardless of BKEP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BKEP's net profit margin of 7.90% compares favorably to the industry average.
  • 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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 41.3% when compared to the same quarter one year ago, falling from $6.17 million to $3.62 million.
  • The debt-to-equity ratio is very high at 6.18 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, BKEP maintains a poor quick ratio of 0.83, which illustrates the inability to avoid short-term cash problems.
  • You can view the full analysis from the report here: BKEP Ratings Report

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