NEW YORK (TheStreet) -- Shares of Exterran Partners LP (EXLP) are soaring 3.55% to $28.26 after it announced entering into an agreement to acquire natural gas compression assets from a subsidiary of Chesapeake Energy Corp. (CHK), called MidCon Compression LLC for approximately $135 million.
Shares of Chesapeake Energy are up 0.50% to $28.32.
Exterran Partners said it expects the transaction to be immediately accretive to its distributable cash flow per limited partner unit, and the deal is expected to close in the third quarter of this year.
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Separately, TheStreet Ratings team rates EXTERRAN PARTNERS LP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate EXTERRAN PARTNERS LP (EXLP) a BUY. This is driven by some important positives, 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, good cash flow from operations, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- EXLP's revenue growth has slightly outpaced the industry average of 10.9%. Since the same quarter one year prior, revenues rose by 14.1%. 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 increased to $45.40 million or 38.94% when compared to the same quarter last year. Despite an increase in cash flow, EXTERRAN PARTNERS LP's cash flow growth rate is still lower than the industry average growth rate of 49.24%.
- 40.04% is the gross profit margin for EXTERRAN PARTNERS LP which we consider to be strong. Regardless of EXLP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.73% trails the industry average.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Energy Equipment & Services industry and the overall market, EXTERRAN PARTNERS LP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- EXTERRAN PARTNERS 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. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, EXTERRAN PARTNERS LP increased its bottom line by earning $1.18 versus $0.14 in the prior year. For the next year, the market is expecting a contraction of 35.6% in earnings ($0.76 versus $1.18).
- You can view the full analysis from the report here: EXLP Ratings Report