NEW YORK (TheStreet) -- Atlas Resource Partners (ARP) shares are down 9.17% to $7.63 in afternoon trading on Tuesday after the natural gas and oil producer priced its secondary offering today.
The Pittsburgh-based company priced 6.5 million common units at an offering price of $7.97 per unit with Wells Fargo (WFC), Citigroup (C), Deutsche Bank (DB), J.P. Morgan (JPM) and Morgan Stanley (MS) acting as joint book runners for the offering.
The company expects the net proceeds from the offering to total about $49.5 million after underwriting discounts and expenses.
TheStreet Ratings team rates ATLAS RESOURCE PARTNERS LP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate ATLAS RESOURCE PARTNERS LP (ARP) 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 generally high debt management risk, disappointing return on equity and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Currently the debt-to-equity ratio of 1.61 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.47, 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, ATLAS RESOURCE PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
- ARP'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 56.36%, 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.
- ATLAS RESOURCE PARTNERS LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ATLAS RESOURCE PARTNERS LP reported poor results of -$7.79 versus -$1.88 in the prior year. This year, the market expects an improvement in earnings (-$0.48 versus -$7.79).
- 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 895.8% when compared to the same quarter one year prior, rising from -$10.76 million to $85.64 million.
- You can view the full analysis from the report here: ARP Ratings Report