NEW YORK (TheStreet) -- TerraForm Power (TERP - Get Report) stock is soaring by 29.41% to $11.21 in mid-morning trading on Wednesday, after the company lowered the cost of buying Vivint Solar's (VSLR) rooftop solar portfolio to $799 million from $922 million.
TerraForm, which is a Bethesda-based clean energy company, is a subsidiary to solar energy company SunEdison (SUNE). SunEdison announced earlier this year that it was buying Vivint for about $2.2 billion. After the acquisition completed, TerraForm would buy Vivint's rooftop solar portfolio for $922 million in cash.
TerraForm has since revised the terms of its agreement to buy Vivint's portfolio, the company said on Wednesday. TerraForm will now pay for the company based on the number of megawatts of installed solar systems in Vivint's portfolio, which is valued at about $799 million.
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Vivint stock is up 14.90% to $9.64 in mid-morning trading on Wednesday.
Separately, TheStreet Ratings team rates TERRAFORM POWER INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
We rate TERRAFORM POWER INC (TERP) a SELL. This is driven by several 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 and generally high debt management risk.
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 Independent Power Producers & Energy Traders industry. The net income has significantly decreased by 286.6% when compared to the same quarter one year ago, falling from $1.91 million to -$3.56 million.
- The debt-to-equity ratio is very high at 2.09 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 3.09, which shows the ability to cover short-term cash needs.
- Compared to other companies in the Independent Power Producers & Energy Traders industry and the overall market on the basis of return on equity, TERRAFORM POWER INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- TERP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 71.63%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter.
- The gross profit margin for TERRAFORM POWER INC is currently very high, coming in at 72.93%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -2.18% is in-line with the industry average.
- You can view the full analysis from the report here: TERP
Based on this information I am going to go out to the Jan 2016s and purchase a put noting that it had decent volume and open interest:
TERP Jan 2016 10.000 put (TERP160115P00010000)
-OPR
1.25 
1.05(45.65%) 10:45AM EST
1.05(45.65%) 10:45AM EST| Prev Close: | 2.30 |
|---|---|
| Open: | 1.25 |
| Bid: | 1.00 |
| Ask: | 1.40 |
| Strike: | 10.00 |
| Expire Date: | 15-Jan-16 |
| Day's Range: | 1.25 - 1.25 |
|---|---|
| Contract Range: | N/A - N/A |
| Volume: | 25 |
| Open Interest: | 867 |
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