Why Enbridge Energy Partners (EEP) Stock Is Up Today

NEW YORK (TheStreet) -- Enbridge Energy Partners (EEP) was gaining 14.6% to $35.45 Thursday after announcing it will sell a 1.26% interest in its natural gas midstream business to Midcoast Energy Partners (MEP).

Enbridge Energy will sell the share in the business for $350 million. After the sale, Enbridge Energy's stake in Midcoast Operating will be down to 48.4%. The company will use the money from the sale to fund its pipeline expansion.

Enbridge Energy and Enbridge (ENB) announced Thursday that its mainline replacement program will cost an estimated $7.5 billion. The program includes replacing pipe in the mainline system that runs from Edmonton, Alberta to Superior, WI.

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TheStreet Ratings team rates ENBRIDGE ENERGY PRTNRS -LP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ENBRIDGE ENERGY PRTNRS -LP (EEP) 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 revenue growth, increase in net income, good cash flow from operations, growth in earnings per share and increase in stock price during the past year. 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:

  • The revenue growth came in higher than the industry average of 3.1%. Since the same quarter one year prior, revenues rose by 22.8%. 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 Oil, Gas & Consumable Fuels industry. The net income increased by 243.3% when compared to the same quarter one year prior, rising from -$83.30 million to $119.40 million.
  • Net operating cash flow has slightly increased to $210.80 million or 2.37% when compared to the same quarter last year. Despite an increase in cash flow, ENBRIDGE ENERGY PRTNRS -LP's cash flow growth rate is still lower than the industry average growth rate of 17.38%.
  • ENBRIDGE ENERGY PRTNRS -LP reported significant earnings per share improvement 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, ENBRIDGE ENERGY PRTNRS -LP swung to a loss, reporting -$0.38 versus $1.25 in the prior year. This year, the market expects an improvement in earnings ($0.93 versus -$0.38).
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: EEP 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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