BreitBurn Energy Partners L.P. : A resistance as obstacle
BreitBurn Energy Partners, oil and gas exploration and production company, reaches a level of resistance. This level could contain the upward trend in the short term.
From a fundamental viewpoint, firstly, we note the high valuation of the company. PER for the current year is at 46.86x and expected at 39.17x for next year. With a valuation ratio of 4.54x, the group appears overvalued compared to its business activity. Regarding the financial situation, leverage is at 3.13x and debts are estimated at USD 748.2 million for the current year.
From a technical viewpoint, the proximity of the USD 19.6 medium-term resistance limits the upside potential on the stock. The short term uptrend could be stopped by this level and prices could decrease sharply in the coming sessions. Technical indicators also show an overbought situation that reinforces this bearish scenario. Thus, there is a higher downside potential than upside.
The graphical configuration argues to establish a short position at the current price. The end of the technical rebound, the consolidation phase and overbought situation form all the characteristics for short selling. The first objective will be fixed near the USD 17.4 short term support and by extension the USD 16.2 area. This strategy should be protected by a stop loss above USD 18.9.
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Valuation |
2013e |
2014e |
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PER (Price / EPS)
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68,2x |
27,4x |
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Capitalization / Revenue
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3,28x |
2,72x |
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EV / Revenue
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5,04x |
4,34x |
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EV / EBITDA
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8,88x |
7,31x |
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Yield (DPS / Price)
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9,89% |
10,2% |
| Profitability |
2013e |
2014e |
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Operating Margin (EBIT / Sales)
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17,9% |
22,8% |
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operating laverage (Delta EBIT / Delta Sales)
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9,16x |
2,58x |
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Net Margin (Net Profit / Revenue)
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5,04% |
11,0% |
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ROA (Net Profit / Asset)
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3,00% |
4,74% |
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ROE (Net Profit / Equities)
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3,60% |
13,5% |
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Rate of Dividend
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674% |
280% |
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