Why Tallgrass Energy Partners (TEP) Stock Is Down Today

NEW YORK (TheStreet) -- Tallgrass Energy Partners  (TEP) fell Tuesday after the company announced the pricing of its public offering of common units.

The company priced 7 million shares of common units, which represent limited partner interests, at $41.07 a unit. The offering also includes a 30-day option for underwriters to purchase up to an additional 1.05 million units.

The stock was down 4.62% to $40.87 at 10:20 a.m.

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Separately, TheStreet Ratings team rates TALLGRASS ENERGY PRT LP as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate TALLGRASS ENERGY PRT LP (TEP) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and poor profit margins."

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

  • Net operating cash flow has decreased to $19.61 million or 38.76% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for TALLGRASS ENERGY PRT LP is rather low; currently it is at 23.04%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 15.18% is above that of the industry average.
  • TEP's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.39 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TALLGRASS ENERGY PRT LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • TALLGRASS ENERGY PRT LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, TALLGRASS ENERGY PRT LP increased its bottom line by earning $0.35 versus $0.14 in the prior year. This year, the market expects an improvement in earnings ($1.23 versus $0.35).
  • You can view the full analysis from the report here: TEP 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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