Why EnLink Midstream Partners (ENLK) Is Slipping on Friday

NEW YORK (TheStreet) -- EnLink Midstream Partners (ENLK) is slipping on Friday after pricing its secondary offering of common stock.

By market open, shares had taken off 5.4% to $30.40.

The natural gas producer announced an underwritten secondary offering of 17.99 million common units representing limited partner interests owned by GSO Crosstex Holdings and a number of its affiliates.

Total gross proceeds of the offering will amount to around $550 million. EnLink will receive none of the proceeds from the offering and the total number of its outstanding common units will remain unchanged.

The offering is expected to close around March 26, pursuant to closing conditions.

Citigroup is the sole underwriter of the offering.

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TheStreet Ratings team rates ENLINK MIDSTREAM PARTNERS LP as a Buy with a ratings score of B-. The team has this to say about their recommendation:

"We rate ENLINK MIDSTREAM PARTNERS LP (ENLK) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company shows low profit margins."

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

  • The revenue growth came in higher than the industry average of 7.8%. Since the same quarter one year prior, revenues slightly increased by 9.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 25.49% and other important driving factors, this stock has surged by 88.36% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ENLK should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 27.8% when compared to the same quarter one year prior, rising from -$24.54 million to -$17.73 million.
  • ENLINK MIDSTREAM PARTNERS LP has improved earnings per share by 25.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ENLINK MIDSTREAM PARTNERS LP reported poor results of -$1.71 versus -$1.01 in the prior year. This year, the market expects an improvement in earnings ($0.43 versus -$1.71).
  • The gross profit margin for ENLINK MIDSTREAM PARTNERS LP is currently extremely low, coming in at 10.26%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -3.08% trails that of the industry average.

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