NEW YORK (TheStreet) -- Exterran Partners (EXLP)  is slipping on Friday after the natural gas distributor priced its previously-announced public offering of common stock.

By market open, shares had tripped 5.4% to $27.92.

The Houston-based business said it would offer 5.4 million shares of common stock representing limited partner interests in Exterran at $28.36 a share. The offering is expected to close around April 2.

The company also granted underwriters a 30-day option to purchase an additional 810,000 common units to cover over-allotments.

Net proceeds, totaling approximately $147.3 million, will be used to fund a portion of its previously-announced pending acquisition of natural gas compression assets. In late February, Exterran announced it would purchase 334 compression units for $360 million from Chesapeake Energy (CHK) - Get Report subsidiary MidCon Compression.

Remaining funds from the offering will be used to pay down outstanding debt under its revolving credit facility.

Wells Fargo, Bank of America, JPMorgan, RBC Capital Markets and Goldman Sachs will act as joint book-running managers.

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TheStreet Ratings team rates EXTERRAN PARTNERS LP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate EXTERRAN PARTNERS LP (EXLP) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • EXLP's revenue growth has slightly outpaced the industry average of 8.2%. Since the same quarter one year prior, revenues rose by 16.2%. 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.
  • 41.18% is the gross profit margin for EXTERRAN PARTNERS LP which we consider to be strong. Regardless of EXLP'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 9.55% trails the industry average.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Energy Equipment & Services industry and the overall market, EXTERRAN PARTNERS LP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • EXTERRAN PARTNERS LP's earnings per share declined by 38.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, EXTERRAN PARTNERS LP increased its bottom line by earning $1.18 versus $0.14 in the prior year. For the next year, the market is expecting a contraction of 16.9% in earnings ($0.98 versus $1.18).

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