NEW YORK (TheStreet) -- Shares of BreitBurn Energy Partners (BBEP) are down 5.7% to $6.62 as oil futures hit new five year lows Monday for intraday trading on expectations that a global glut of crude could keep growing, the Wall Street Journal reports.
WTI for February delivery fell 2.08% to $53.59 a barrel at 2:29 p.m. on the New York Mercantile Exchange. Futures touched $53.52, the lowest level since May 2009.
Additionally, Stifel Nicolaus downgraded the Los Angeles-based oil and gas company to "hold" last week, saying that its ability to fund its reduced organic capital expenditure spending while funding the near term shortfall in coverage will be "challenged."
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Separately, TheStreet Ratings team rates BREITBURN ENERGY PARTNERS LP as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate BREITBURN ENERGY PARTNERS LP (BBEP) 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, growth in earnings per share and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- BBEP's very impressive revenue growth greatly exceeded the industry average of 6.7%. Since the same quarter one year prior, revenues leaped by 153.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- BREITBURN ENERGY PARTNERS 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, BREITBURN ENERGY PARTNERS LP continued to lose money by earning -$0.40 versus -$0.60 in the prior year. This year, the market expects an improvement in earnings ($0.20 versus -$0.40).
- The debt-to-equity ratio is somewhat low, currently at 0.91, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that BBEP's debt-to-equity ratio is low, the quick ratio, which is currently 0.56, displays a potential problem in covering short-term cash needs.
- BBEP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 65.02%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, BREITBURN ENERGY PARTNERS 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: BBEP Ratings Report