NEW YORK (TheStreet) -- Shares of TECO Energy (TE) were gaining 22.3% to $25.77 in morning trading Tuesday after the announcement on Friday that Canadian energy company Emera (EMRAF) will acquire the company for about $6.48 billion.

Emera will pay $27.55 a share to acquire the Tampa, FL-based energy company, a premium of about 31% over TECO Energy's Friday closing price. The deal values TECO Energy at $10.4 billion including debt.

The combined company will have more than $20 billion of assets and more than 2.4 million electric and gas customers, the companies said.

"TECO Energy's team members have worked hard to consistently generate strong financial and operating results from our regulated businesses and have positioned the company well for long-term earnings growth," TECO Energy President and CEO Johgn Ramil said in a statement. "We are proud that Emera has recognized the value of our business and that our shareholders will be rewarded for their confidence in our company."

TheStreet Ratings team rates TECO ENERGY INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate TECO ENERGY INC (TE) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, solid stock price performance and notable return on equity. 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:

  • The revenue growth came in higher than the industry average of 7.5%. Since the same quarter one year prior, revenues rose by 12.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 102.15% to $149.80 million when compared to the same quarter last year. In addition, TECO ENERGY INC has also vastly surpassed the industry average cash flow growth rate of 42.06%.
  • TECO ENERGY INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, TECO ENERGY INC increased its bottom line by earning $0.92 versus $0.88 in the prior year. This year, the market expects an improvement in earnings ($1.10 versus $0.92).
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Multi-Utilities industry and the overall market, TECO ENERGY INC's return on equity is below that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: TE Ratings Report