Why The Laclede Group (LG) Stock Is Falling Today

NEW YORK (TheStreet) -- The Laclede Group (LG) was falling 1.2% to $46.61 Friday after pricing a 9 million share offering of common stock.

The company priced the 9 million share offering at $46.25 a share. The Laclede Group also priced an offering of 2.5 million equity units, or $125 million in equity units, at $50 a unit. Each units consists of a contract to buy common stock in the future and a 5% undivided beneficial ownership interest in a 2014 Series A 2.00% remarketable junior subordinated note due 2022 with a principal amount of $1,000.

The Laclede Group expects proceeds of $522 million in aggregate, and will use them to fund a portion of the cash used in the pending acquisition of Alabama Gas Company.

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TheStreet Ratings team rates LACLEDE GROUP INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate LACLEDE GROUP INC (LG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, attractive valuation levels, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

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

  • LG's very impressive revenue growth greatly exceeded the industry average of 35.9%. Since the same quarter one year prior, revenues leaped by 74.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Gas Utilities industry. The net income increased by 72.7% when compared to the same quarter one year prior, rising from $30.24 million to $52.22 million.
  • Net operating cash flow has increased to $158.52 million or 14.49% when compared to the same quarter last year. Despite an increase in cash flow, LACLEDE GROUP INC's average is still marginally south of the industry average growth rate of 14.93%.
  • The debt-to-equity ratio is somewhat low, currently at 0.79, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.87 is somewhat weak and could be cause for future problems.
  • You can view the full analysis from the report here: LG 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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