NEW YORK (TheStreet) --Shares of SunEdison Inc. (SUNE are rising higher by 10.66% to $18.38 in pre-market trading on Tuesday, following last night's announcement that the solar power provider and its TerraForm Power segment have signed a definitive agreement to purchase the privately held First Wind for $2.4 billion.
"With the purchase, SunEdison acquires the leading independent wind development and asset management company and becomes the leading global renewable energy development company," SunEdison said.
The company raised its 2015 project installation guidance to 2.1 GW to 2.3 GW, from 1.6 GW to 1.8 GW, as a result of the transaction.
The purchase of First Wind is expected to be "immediately accretive" to TerraForm Power and is expected to deliver $72.5 million in unlevered cash available for distribution, the company said.
The transaction is expected to close during the 2015 first quarter.
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Separately, TheStreet Ratings team rates SUNEDISON INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate SUNEDISON INC (SUNE) 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 deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and poor profit margins."
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 Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 156.7% when compared to the same quarter one year ago, falling from -$110.40 million to -$283.40 million.
- The debt-to-equity ratio is very high at 16.45 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, SUNE has a quick ratio of 0.53, this demonstrates the lack of ability of the company to cover short-term liquidity 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 Semiconductors & Semiconductor Equipment industry and the overall market, SUNEDISON INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$276.30 million or 169.29% 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 SUNEDISON INC is currently lower than what is desirable, coming in at 25.69%. Regardless of SUNE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SUNE's net profit margin of -41.60% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: SUNE Ratings Report