Enbridge Energy Partners LP Stock Downgraded (EEP)

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.

Enbridge Energy Partners, L.P. owns and operates crude oil and liquid petroleum transportation and storage assets, as well as natural gas gathering, treating, processing, transmission, and marketing assets in the United States. The company has a P/E ratio of 15.7, equal to the average energy industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Enbridge Energy has a market cap of $6.96 billion and is part of the basic materials sector and energy industry. Shares are down 11.9% year to date as of the close of trading on Monday.

You can view the full Enbridge Energy Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
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