Why Memorial Production Partners (MEMP) Stock Is Down Today

NEW YORK (TheStreet) -- Shares of Memorial Production Partners  (MEMP) fell 3.8% to $22.28 in morning trading Thursday on high volume after the company priced an offering of common units.

The company priced 13 million units at $22.29 a unit. The offering contains a 30-day option for underwriters to purchase up to an additional 1.95 million units. The company expects the offering to close on Sept. 9.

Memorial Production Partners expects net proceeds of approximately $279.9 million, or $321.9 million if the underwriters fully exercise their options. The company plans to use the proceeds to repay part of its outstanding borrowings under its revolving credit facility.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

More than 6.3 million shares had changed hands as of 10:12 a.m., compared to the average volume of 531,697.

Separately, TheStreet Ratings team rates MEMORIAL PRODUCTION PRTRS LP as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate MEMORIAL PRODUCTION PRTRS LP (MEMP) 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 robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."

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

  • The revenue growth greatly exceeded the industry average of 3.5%. Since the same quarter one year prior, revenues rose by 36.7%. 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 55.81% to $48.03 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 -5.36%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The debt-to-equity ratio is very high at 3.16 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.44, which clearly demonstrates the inability to cover short-term cash needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MEMORIAL PRODUCTION PRTRS LP's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: MEMP Ratings Report

EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he and Stephanie Link think could be potentially HUGE winners. Click here to see the holdings for FREE.

More from Markets

Alphabet, Caterpillar, Coca-Cola and Amazon - 5 Things You Must Know

Alphabet, Caterpillar, Coca-Cola and Amazon - 5 Things You Must Know

Apple Suppliers Slide After European, Asian Chipmakers Echo Smartphone Concerns

Apple Suppliers Slide After European, Asian Chipmakers Echo Smartphone Concerns

Global Stocks Edge Higher, But Bond Yields, Oil Prices May Test Market Strength

Global Stocks Edge Higher, But Bond Yields, Oil Prices May Test Market Strength

SAP Shares Leap After Cloud Business Prompts Full-Year Guidance Upgrade

SAP Shares Leap After Cloud Business Prompts Full-Year Guidance Upgrade

Sohn Conference Briefly Distracts From Barrage of Earnings -- ICYMI

Sohn Conference Briefly Distracts From Barrage of Earnings -- ICYMI