A sharp fall in share price of BreitBurn Energy Partners L.P. (NASDAQ:BBEP) on Monday raised an alarm bell. It was naturally that any investor would have been worried whether the company would be able to survive the trend of drop in oil prices witnessed in the recent past. The Street preferred to recommend a Hold rating rather than press the button of Sell despite oil price posing a potential downside risk.
Rating Of Stock
The street.com said that it rated the shares of BreitBurn Energy Partners as Hold due to a mixture of strength, as well as, weaknesses. However, it could not come to a definite conclusion whether the strength would prove to be positives for the company. In the same way, it was not in a position justify any negative factors due to some weaknesses to rate it as Sell.
While BreitBurn Energy Partners derive strength from strong revenue uptick, growth in profit and earnings per share, its return on equity and stock performance in the bourses were a big disappointment.
The company’s revenue growth was impressive and topped the industry average growth of 6.4%. Its revenues jumped over 150% in the most recent quarter from the year-ago period. Obviously, it helped to drive higher earnings per share during the quarter.
Similarly, BreitBurn Energy Partners recorded a pattern of favorable EPS uptick over the last year period. The Street believes that the trend would continue suggesting improved business conditions for the company.
The company’s debt to equity ratio was lower than the industry average at 0.91 suggesting a strong control over the debt management. However, the quick ratio could pose a problem in meeting cash requirements on a short-term basis.
On the weakness side, BreitBurn Energy Partners underperformed relative to the S&P 500 index by dropping about 21% during the one-year period. Similarly, its return on equity fell from the last year quarter implying weaknesses in the organization.
Oil Price To Fall Further
As the oil price reached a 5-year low on Monday, analysts’ and experts’ started predicting a further drop in oil price. However, BreitBurn Energy Partners would not likely to struggle to survive the present price crisis though its shares could likely continue to underperform in the bourses.