Why Memorial Production (MEMP) Stock Is Down Today

NEW YORK (TheStreet) -- Memorial Production (MEMP) was falling -6.6% to $22.34 Thursday after pricing an offering of 8.6 million common units.

The company priced the public offering of 8.6 million common units for total gross proceeds of about $193.5 million. The underwriters of the offering have a 30-day option t buy up to an additional 1.29 million common units.

Memorial Production plans to use the net proceeds from the offering to repay part of the borrowings under its revolving credit facility. The offering is expected to close on July 14, 2014.

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

"We rate MEMORIAL PRODUCTION PRTRS LP (MEMP) 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, good cash flow from operations, expanding profit margins 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:

  • The revenue growth greatly exceeded the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 48.3%. 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.
  • Net operating cash flow has significantly increased by 70.62% to $48.02 million when compared to the same quarter last year. In addition, MEMORIAL PRODUCTION PRTRS LP has also vastly surpassed the industry average cash flow growth rate of 17.65%.
  • The gross profit margin for MEMORIAL PRODUCTION PRTRS LP is rather high; currently it is at 66.27%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -33.78% is in-line with the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • MEMORIAL PRODUCTION PRTRS 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, MEMORIAL PRODUCTION PRTRS LP turned its bottom line around by earning $0.11 versus -$0.01 in the prior year. This year, the market expects an improvement in earnings ($1.93 versus $0.11).
  • You can view the full analysis from the report here: MEMP 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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