NEW YORK (TheStreet) -- NGL Energy Partners (NGL) stock is moving lower on Wednesday after the company announced and priced its underwritten public offering of 8 million shares of common stock at $43.85 per unit. Underwriters have been granted a 30-day overallotment option to purchase up to 1.2 million additional shares.
The offering is expected to close on June 23 and NGL intends to use net proceeds to repay indebtedness and for general partnership purposes, including capital expenditures and potential acquisitions. Bank of America, Barclays, Wells Fargo, Deutsche Bank, RBC Capital Markets, UBS, Goldman Sachs and Raymond James are acting as joint bookrunners for the offering.
By late afternoon, shares had dropped 6.8% to $42.55. Trading volume of 5.8 million shares was 31 times higher than its three-month daily average
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TheStreet Ratings team rates NGL ENERGY PARTNERS LP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate NGL ENERGY PARTNERS LP (NGL) a BUY. This is driven by a few notable 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 robust 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 has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- NGL's very impressive revenue growth greatly exceeded the industry average of 3.1%. Since the same quarter one year prior, revenues leaped by 145.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving 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 Oil, Gas & Consumable Fuels industry. The net income increased by 89.5% when compared to the same quarter one year prior, rising from $22.34 million to $42.33 million.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 48.06% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- NGL ENERGY PARTNERS LP has improved earnings per share by 17.9% 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, NGL ENERGY PARTNERS LP reported lower earnings of $0.32 versus $0.56 in the prior year. This year, the market expects an improvement in earnings ($1.74 versus $0.32).
- The debt-to-equity ratio of 1.07 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, NGL maintains a poor quick ratio of 0.92, which illustrates the inability to avoid short-term cash problems.
- You can view the full analysis from the report here: NGL Ratings Report