Ferrellgas Partners (FGP) Stock Falls After Pricing Public Offering

NEW YORK (TheStreet) -- Shares of Ferrellgas Partners (FGP) were falling 2.3% to $22.50 on heavy trading volume Wednesday after the propane company announced the pricing of the 6.325 million common units in its public offering.

Ferrellgas Partners priced the 6.325 million common units in the public offering at $23 a share. The company granted the underwriters of the offering a 30-day option to purchase 948,750 additional common units.

The company expects net proceeds of about $139.7 million, or about $160.6 million if the option is exercised in full. Ferrellgas Partners plans to use the net proceeds from the offering to fund part of the cash portion of the consideration for the pending acquisition of all of the outstanding membership interests of Bridger Logistic and its subsidiaries.

The offering is expecting to close on June 8, 2015.

About 2.4 million shares of Farrellgas Partners were traded by 10:21 a.m. Wednesday, well above the company's average trading volume of about 252,000 shares a day.

TheStreet Ratings team rates FERRELLGAS PARTNERS -LP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate FERRELLGAS PARTNERS -LP (FGP) 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 increase in net income, good cash flow from operations and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins."

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 Gas Utilities industry. The net income increased by 41.3% when compared to the same quarter one year prior, rising from $60.46 million to $85.46 million.
  • Net operating cash flow has significantly increased by 192.62% to $33.11 million when compared to the same quarter last year. In addition, FERRELLGAS PARTNERS -LP has also vastly surpassed the industry average cash flow growth rate of 25.69%.
  • FERRELLGAS PARTNERS -LP has improved earnings per share by 23.6% 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, FERRELLGAS PARTNERS -LP reported lower earnings of $0.40 versus $0.68 in the prior year. This year, the market expects an improvement in earnings ($0.71 versus $0.40).
  • The gross profit margin for FERRELLGAS PARTNERS -LP is rather low; currently it is at 23.02%. Regardless of FGP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, FGP's net profit margin of 12.83% compares favorably to the industry average.
  • FGP has underperformed the S&P 500 Index, declining 9.13% from its price level of one year ago. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

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