Niska Partners (NKA) Stock Surging After Being Acquired by Brookfield Infrastructure

NEW YORK (TheStreet) -- Shares of Niska Gas Storage Partners LLC (NKA) were surging after the company agreed to be acquired by Brookfield Infrastructure (BIP) this morning.

The deal is valued at about $911.9 million, including the assumption of debt. 

Under the terms of the deal, Brookfield will acquire all of Niska's outstanding common units for $4.225 a piece in cash.

The deal is expected to close in the second half of 2016 and is subject to customary closing conditions, and regulatory approval by the California Public Utilities Commission.
 
Shares of Niska Partners were up 174.05% to $3.59 as of 10:20 a.m. ET today.
 
Radnor, Penn.-based Niska is a midstream natural gas services provider with operations focused on owning, operating, developing and acquiring midstream energy assets in the U.S. and Canada.
 
Separately, TheStreet Ratings team rates NISKA GAS STORAGE PARTNERS as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
 
"We rate NISKA GAS STORAGE PARTNERS (NKA) a SELL. This is driven by multiple 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 deteriorating net income, generally high debt management risk, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
 
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 Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 1836.2% when compared to the same quarter one year ago, falling from -$13.41 million to -$259.62 million.
  • The debt-to-equity ratio is very high at 3.62 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.16, 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, NISKA GAS STORAGE PARTNERS's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 90.36%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1751.35% compared to the year-earlier 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.
  • NISKA GAS STORAGE PARTNERS has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, NISKA GAS STORAGE PARTNERS continued to lose money by earning -$0.24 versus -$0.63 in the prior year. For the next year, the market is expecting a contraction of 3295.8% in earnings (-$8.15 versus -$0.24).
  • You can view the full analysis from the report here: NKA Ratings Report

If you liked this article you might like

5 Stocks Under $10 Set to Soar Higher

16 Risky Micro-Cap Stocks to Avoid Despite Their Tasty Dividends

4 Stocks Under $10 Making Big Moves: Virnetx, WidePoint and More

5 Stocks Under $10 Setting Up to Trade Higher: Callon Petroleum and More