NEW YORK ( TheStreet) -- Enbridge Energy Partners (NYSE: EEP) has been downgraded by TheStreet Ratings from buy to hold. Among the primary strengths of the company is its respectable return on equity which we feel is likely to continue. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and generally poor debt management. Highlights from the ratings report include:
- 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, ENBRIDGE ENERGY PRTNRS -LP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- The revenue fell significantly faster than the industry average of 11.8%. Since the same quarter one year prior, revenues fell by 20.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- ENBRIDGE ENERGY PRTNRS -LP's earnings per share declined by 34.2% 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, ENBRIDGE ENERGY PRTNRS -LP turned its bottom line around by earning $1.89 versus -$1.08 in the prior year. For the next year, the market is expecting a contraction of 28.3% in earnings ($1.36 versus $1.89).
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry average. The net income has decreased by 15.4% when compared to the same quarter one year ago, dropping from $117.10 million to $99.00 million.
- The debt-to-equity ratio of 1.28 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, EEP has a quick ratio of 0.66, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
-- Written by a member of TheStreet Ratings Staff