NEW YORK (TheStreet) -- Atlantic Power (AT) was falling 22.6% to $2.53 Tuesday after providing an update on its strategic review process, revising its dividend rate, and announcing a new interim president and CEO.
In an update on the outcome of its strategic review, the electric utilities company announced said a sale or merger is not in the best interests of the company or shareholders, saying that it will continue operating independently. Atlantic Power is still assessing the possibility assets sales or joint ventures.
The company also announced it will more to a quarterly dividend rate of C$0.03 a share from its previous monthly dividend of C$0.03333 a share. The first quarterly dividend will be declared in November and paid in December.
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In the same press release Atlantic Power appointed company director Ken Hartwick as interim president and CEO.
TheStreet Ratings team rates ATLANTIC POWER CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate ATLANTIC POWER CORP (AT) a SELL. This is driven by a few notable weaknesses, 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 deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Independent Power Producers & Energy Traders industry. The net income has significantly decreased by 1870.0% when compared to the same quarter one year ago, falling from -$3.00 million to -$59.10 million.
- 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 Independent Power Producers & Energy Traders industry and the overall market, ATLANTIC POWER CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The debt-to-equity ratio is very high at 3.67 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, AT's quick ratio is somewhat strong at 1.37, demonstrating the ability to handle short-term liquidity needs.
- In its most recent trading session, AT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- ATLANTIC POWER CORP 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 not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, ATLANTIC POWER CORP continued to lose money by earning -$0.24 versus -$1.10 in the prior year.
- You can view the full analysis from the report here: AT Ratings Report
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