WHy Teekay LNG (TGP) Stock Is Down Today

NEW YORK (TheStreet) -- Teekay LNG (TGP) was falling -5.5% to $44.37 Friday after announcing the pricing of a 2.8 million common unit spot secondary offering.

The company priced the 2.8 million common unit offering at $45.05 a common unit. The underwriters of the offering have a 30-day option to purchase up to 420,000 additional units.

Teekay LNG plans to use the proceeds from the offering to fund the equity portion of its first installment payment for the sic newbuilding liquefied natural gas carriers order by its joint venture with China LNG Shipping.

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TheStreet Ratings team rates TEEKAY LNG PARTNERS LP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate TEEKAY LNG PARTNERS LP (TGP) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and feeble growth in the company's earnings per share."

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

  • TGP's revenue growth has slightly outpaced the industry average of 3.2%. Since the same quarter one year prior, revenues slightly increased by 4.5%. 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.
  • The gross profit margin for TEEKAY LNG PARTNERS LP is currently very high, coming in at 74.79%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 37.68% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $41.40 million or 13.23% when compared to the same quarter last year. Despite an increase in cash flow, TEEKAY LNG PARTNERS LP's average is still marginally south of the industry average growth rate of 17.51%.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 29.8% when compared to the same quarter one year ago, falling from $54.45 million to $38.25 million.
  • Currently the debt-to-equity ratio of 1.70 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.37, which clearly demonstrates the inability to cover short-term cash needs.
  • You can view the full analysis from the report here: TGP 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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