NEW YORK (TheStreet) -- Teekay (TK - Get Report) stock is plummeting 59.81% to $7.03 on heavy volume after the marine energy transportation, storage and production company slashed its quarterly dividend.
The company's board of directors approved a plan to cut its quarterly dividend payout to 5.5 cents per share from 55 cents per share.
The reduction will begin with the 2015 fourth quarter dividend payable in February 2016.
Teekay Offshore (TOO) and Teekay LNG's (TGP), which are Teekay's master limited partnerships, announced that they will lower their quarterly cash distribution amounts, which prompted the decreased dividend, according to a statement.
Teekay Offshore and Teekay LNG will instead put the funds toward equity capital requirements and debt reduction.
Teekay hopes to achieve higher long-term value creation by supporting its ownership interests in Teekay Offshore and Teekay LNG.
"The effect of the distribution reductions of our two MLPs is that Teekay Corporation will temporarily forego its near-term GP cash flows," CEO Peter Evensen said in a statement, adding that the company expects today's actions will ultimately lead to higher distributable cash flow per unit in the MLPs.
About 14.01 million shares of Teekay have been traded so far today, well above the company's average trading volume of roughly 896,838 shares per day.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate TEEKAY CORP as a Hold with a ratings score of C-. 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 robust revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and generally higher debt management risk.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 36.8%. Since the same quarter one year prior, revenues rose by 24.8%. 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.
- TEEKAY CORP 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, TEEKAY CORP continued to lose money by earning -$0.77 versus -$1.62 in the prior year. This year, the market expects an improvement in earnings ($1.15 versus -$0.77).
- 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 615.4% when compared to the same quarter one year ago, falling from $2.37 million to -$12.24 million.
- The debt-to-equity ratio is very high at 8.24 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, TK has a quick ratio of 0.55, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: TK