However, the firm maintained a "buy" rating as Dynegy announced an additional $30 million of transaction synergies, primarily related to 270 MW of low-cost uprates it is implementing at acquired units, according to the analyst note.
"This positive development offset some of the $50 million higher base of costs than we had anticipated," Deutsche Bank analysts said.
Dynegy, based in Houston, is an electric utility company that owns and operates a number of natural gas-fired or coal-fired power stations.
Separately, TheStreet Ratings team rates DYNEGY INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate DYNEGY INC (DYN) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strongest point has been its a solid financial position based on a variety of debt and liquidity measures that we have looked at. We feel its strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- DYNEGY INC 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. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DYNEGY INC continued to lose money by earning -$2.60 versus -$3.59 in the prior year. This year, the market expects an improvement in earnings (-$0.12 versus -$2.60).
- DYN, with its decline in revenue, slightly underperformed the industry average of 16.5%. Since the same quarter one year prior, revenues fell by 17.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The debt-to-equity ratio is very high at 2.50 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 2.69, which shows the ability to cover short-term cash needs.
- The share price of DYNEGY INC has not done very well: it is down 7.20% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- The gross profit margin for DYNEGY INC is rather low; currently it is at 22.78%. Regardless of DYN's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, DYN's net profit margin of -28.48% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: DYN Ratings Report