Why TETRA Technologies (TTI) Stock Is Gaining Today

NEW YORK (TheStreet) --Shares of TETRA Technologies Inc. (TTI) are higher by 4.86% to $11.66 in mid-morning trading on Monday after the oil and gas services company announced its majority owned, publicly-traded partnership Compressco Partners L.P (GSJK) purchased the outstanding shares of Compressor Systems Inc. (CSI) for $825 million in cash.

The deal is expected to increase Compressco's total horsepower offering from approximately 187,000 to over 1,045,000, and allow Compressco to utilize an expanded range of compressor packages for compressor services to customers, the company said.

The expansion is expected to allow Compressco to operate in the compression market at a broader level, the company added.

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The transaction is expected to close in August.

Separately, TheStreet Ratings team rates TETRA TECHNOLOGIES INC/DE as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate TETRA TECHNOLOGIES INC/DE (TTI) 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, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."

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

  • TTI's revenue growth trails the industry average of 20.5%. Since the same quarter one year prior, revenues slightly increased by 2.1%. 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 significantly increased by 139.69% to $36.07 million when compared to the same quarter last year. In addition, TETRA TECHNOLOGIES INC/DE has also vastly surpassed the industry average cash flow growth rate of -80.13%.
  • TTI's debt-to-equity ratio of 0.71 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.09 is sturdy.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Energy Equipment & Services industry and the overall market, TETRA TECHNOLOGIES INC/DE's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for TETRA TECHNOLOGIES INC/DE is rather low; currently it is at 22.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -3.25% is significantly below that of the industry average.
  • You can view the full analysis from the report here: TTI Ratings Report
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