Editor's Note: 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 NEW YORK ( TheStreet) -- Blueknight Energy Partners L.P (Nasdaq: BKEP) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and generally disappointing historical performance in the stock itself.
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- The debt-to-equity ratio is very high at 3.54 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 0.79, which illustrates the inability to avoid short-term cash problems.
- BKEP has underperformed the S&P 500 Index, declining 14.37% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- BLUEKNIGHT ENERGY PRTNRS LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, BLUEKNIGHT ENERGY PRTNRS LP continued to lose money by earning -$0.54 versus -$0.91 in the prior year. This year, the market expects an improvement in earnings ($0.42 versus -$0.54).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 215.0% when compared to the same quarter one year prior, rising from -$5.35 million to $6.15 million.
- In comparison 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 greatly exceeded that of the S&P 500.
-- Written by a member of TheStreet Ratings Staff