NEW YORK (TheStreet) -- Breitburn Energy Partners (BBEP) stock is down 20.90% to $1.58 on heavy trading volume on Tuesday, after the energy company said it was dropping distribution of its common units.
The Los Angeles-based oil company is suspending its cash distributions on its common units due to weakness in commodity prices, Breitburn announced after yesterday's market close.
"While the decision to suspend Common Unit distributions at this time is a difficult one, we believe it is in the long-term best interest of the company and will allow us to save approximately $111 million annually," CEO Halbert Washburn said in a statement.
The company announced distributions for its Series A Cumulative Redeemable Perpetual Preferred Units at $0.171875 per share, payable on January 15.
On November 5, Breitburn had reported better-than-expected 2015 third quarter earnings results.
So far today, 4.97 million shares of Breitburn have traded, versus its 30-day average of 1.57 million shares.
Separately, TheStreet Ratings team rates BREITBURN ENERGY PARTNERS LP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
We rate BREITBURN ENERGY PARTNERS LP (BBEP) 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 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 1116.5% when compared to the same quarter one year ago, falling from $130.64 million to -$1,327.93 million.
- The debt-to-equity ratio of 1.32 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, BBEP has a quick ratio of 0.69, this demonstrates the lack of ability of the company to cover short-term liquidity 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, BREITBURN ENERGY PARTNERS LP'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 86.27%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 699.02% 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.
- BREITBURN ENERGY PARTNERS LP 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, BREITBURN ENERGY PARTNERS LP turned its bottom line around by earning $2.33 versus -$0.40 in the prior year. For the next year, the market is expecting a contraction of 111.2% in earnings (-$0.26 versus $2.33).
- You can view the full analysis from the report here: BBEP