NEW YORK (TheStreet) -- Shares of Cloud Peak Energy (CLD) were falling 10.1% to $11.28 Wednesday after the mining company announced a public offering of $100 million of mandatory convertible preferred stock.
Cloud Peak Energy announced it will offer 100,000 shares of its Series A mandatory convertible preferred stock with a liquidation preference of $1,000 a share. The company said it will grant the underwriters of the offering a 30-day option to buy an additional 15,000 additional shares to cover any over-allotments.
The company plans to use the net proceeds from the offering to pay for part of its outstanding 8.5% senior notes due in 2019. If the underwriters exercise their option Cloud Peak Energy will use the remaining proceeds for general corporate purposes.
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TheStreet Ratings team rates CLOUD PEAK ENERGY INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate CLOUD PEAK ENERGY INC (CLD) 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 compelling growth in net income, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, poor profit margins and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 406.9% when compared to the same quarter one year prior, rising from $17.97 million to $91.07 million.
- The current debt-to-equity ratio, 0.52, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that CLD's debt-to-equity ratio is low, the quick ratio, which is currently 0.67, displays a potential problem in covering short-term cash needs.
- The gross profit margin for CLOUD PEAK ENERGY INC is rather low; currently it is at 15.77%. It has decreased from the same quarter the previous year. Despite the weak results of the gross profit margin, the net profit margin of 26.60% has significantly outperformed against the industry average.
- Net operating cash flow has significantly decreased to $6.73 million or 93.30% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: CLD Ratings Report