NEW YORK (TheStreet) -- Shares of TransGlobe Energy Corp. (TGA) are up 3.91% to $7.44 after the company said its previously announced arrangement with Caracal Energy CRCL was terminated after Caracal agreed to be taken over by Glencore GLNCY, the Wall Street Journal reports
TransGlobe said it received a $9.25 million break-up fee from Caracal, adding that it plans to reintroduce its previously announced dividend.
TheStreet Ratings team rates TRANSGLOBE ENERGY CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate TRANSGLOBE ENERGY CORP (TGA) 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 largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- TGA's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 7.04, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for TRANSGLOBE ENERGY CORP is rather high; currently it is at 66.82%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, TGA's net profit margin of 8.48% compares favorably to the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 80.2% when compared to the same quarter one year ago, falling from $34.84 million to $6.89 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TRANSGLOBE ENERGY CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full analysis from the report here: TGA Ratings Report