Why Dominion Resources (D) Stock Is Down After-Hours Tuesday

NEW YORK (TheStreet) -- Dominion Resources (D) was falling -1.2% to $69.51 after-hours Tuesday after announcing an 18 million equity unit offering.

Each unit in the offering will be issues in a stated amount of $50. The units consist of a contract to buy common stock at a later date, and a 1/20 undivided beneficial ownership interest in a re-marketable subordinated note with a principal amount of $1,000. Dominion will give the underwriters an option to buy up to an additional 2 million units to cover over-allotments.

The company will use the proceeds from the offering for general corporate purposes, and to fund its growth plan which includes the Cove Point liquefaction project.

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TheStreet Ratings team rates DOMINION RESOURCES INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate DOMINION RESOURCES INC (D) 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, notable return on equity and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.8%. Since the same quarter one year prior, revenues slightly increased by 3.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, D's share price has jumped by 27.37%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp 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 other strengths this company displays justify these higher price levels.
  • DOMINION RESOURCES INC's earnings per share declined by 24.4% 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, DOMINION RESOURCES INC increased its bottom line by earning $3.09 versus $2.49 in the prior year. This year, the market expects an improvement in earnings ($3.53 versus $3.09).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Multi-Utilities industry and the overall market on the basis of return on equity, DOMINION RESOURCES INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • You can view the full analysis from the report here: D Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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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