NEW YORK (TheStreet) -- Rentech (RTK) shares are up 4% to $2.34 on Monday after announcing a new long term processing agreement between its Chilean subsidiaries and Mitsubishi's Chilean subsidiary that expands its wood chipping capacity and processing services in the country.

Rentech's subsidiary Fulghum Fibres Chile will rebuild its current mill in Concepcion, Chile to increase annual production capacity to 400,000 bone dry metric tonnes (BDMT) from 180,000 BDMT.

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Additionally, the facility will have the capacity to process barkless logs to 100,000 BDMT from 40,000 and will become Fulghum's largest plant in South America.

Rentech manufactures and sells natural gas-based nitrogen fertilizer products and will process the bark produced from the mill and sell it as biomass fuel.

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

"We rate RENTECH INC (RTK) 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 increase in stock price during the past year, robust revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and poor profit margins."

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

  • Compared to its price level of one year ago, RTK is up 3.72% to its most recent closing price of 2.23. Looking ahead, our view is that this company's fundamentals should not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • The revenue growth greatly exceeded the industry average of 11.2%. Since the same quarter one year prior, revenues rose by 42.4%. 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.
  • RENTECH INC 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. 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, RENTECH INC turned its bottom line around by earning $0.03 versus -$0.06 in the prior year. This year, the market expects earnings to be in line with last year ($0.03 versus $0.03).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Chemicals industry. The net income has significantly decreased by 33.4% when compared to the same quarter one year ago, falling from -$5.24 million to -$6.99 million.
  • The debt-to-equity ratio is very high at 2.78 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, RTK 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: RTK Ratings Report

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