Why Icahn Enterprises (IEP) Stock Is Down Today

NEW YORK (TheStreet) -- Icahn Enterprises  (IEP) fell Monday amid reports that the FBI and SEC are pursuing an insider-trading probe involving Carl Icahn and professional golfer Phil Mickelson.

The Wall Street Journal reported the two federal authorities are investigating whether Mickelson and Las Vegas bettor William "Billy" Walters traded illicitly on Icahn's private information about his investments in public companies. The investigators are looking into whether Icahn tipped off Walters during the past three years about his investments that could have moved the market.

The investigators are also checking into whether Walters tipped off Mickelson at least once and are studying the two men's trading patterns.

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Icahn has denied the claims. "We do not know of any investigation," he said Friday. "We are always very careful to observe all legal requirements in all of our activities." He called the reports of insider trading "inflammatory and speculative." Icahn also said he has heard of Mickelson but has never "spoken to him or met him."

Mickelson said in a statement Saturday he has done nothing wrong and would cooperate with the investigation.

The stock was down 2.94% to $99.39 at 10:34 a.m.

Separately, TheStreet Ratings team rates ICAHN ENTERPRISES LP as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate ICAHN ENTERPRISES LP (IEP) 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. Among the primary strengths of the company is its solid stock price performance. At the same time, however, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and disappointing return on equity."

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

  • Compared to its closing price of one year ago, IEP's share price has jumped by 33.09%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • ICAHN ENTERPRISES LP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, ICAHN ENTERPRISES LP increased its bottom line by earning $8.98 versus $3.72 in the prior year. This year, the market expects an improvement in earnings ($9.41 versus $8.98).
  • IEP, with its decline in revenue, underperformed when compared the industry average of 3.4%. Since the same quarter one year prior, revenues slightly dropped by 8.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Net operating cash flow has significantly decreased to -$802.00 million or 2056.09% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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 Auto Components industry. The net income has significantly decreased by 110.5% when compared to the same quarter one year ago, falling from $277.00 million to -$29.00 million.
  • You can view the full analysis from the report here: IEP Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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