NEW YORK (TheStreet) -- Teekay (TK - Get Report) stock is surging by 22.15% to $8.88 on heavy volume in afternoon trading on Thursday, as Golar LNG Partner's (GMLP) plan to keep its distributions unchanged reassures investors.
The companies will use the cash they generate to fund equity capital requirements and reduce debt, according to statements.
The announcement sparked an industry-wide sell-off on Thursday.
Rival maritime shipping company Golar LNG Partner's announcement today that it will keep its distribution unaltered is restoring some investor confidence.
About 11.28 million shares of Teekay have been traded so far today, significantly higher than the company's average trading volume of roughly 1.88 million 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