NuStar Energy’s market performance
NuStar Energy (NS) stock fell 7.9% after it announced the deal to acquire Navigator Energy Services. At the same time, the Alerian MLP ETF (AMLP), which is comprised of 25 energy MLPs, fell 0.80%. The significant fall in NS stock could be attributed to the high price for the Permian assets, possible dilution, and NuStar’s current bad balance sheet position. NuStar’s leverage situation is expected to deteriorate after the acquisition is completed.
After the acquisition announcement, Moody’s announced a review of NuStar’s ratings for a downgrade. Moody’s vice president, R.J. Cruz, explained, “Even though the Navigator transaction will give NuStar entry into the growing Permian Basin where producer activity continues to increase along with volumes, the increased debt and equity burden will unfavorably impact the already elevated leverage and reduce distribution coverage.”
NuStar Energy’s YTD performance
NuStar Energy rose 24.2% in 2016 but has fallen 4.8% since the beginning of 2017. AMLP has risen 0.16% in 2017. NuStar’s peers Buckeye Partners (BPL) and Magellan Midstream Partners (MMP) have risen 2.2% and 1.9%, respectively, and Sunoco Logistics Partners (SXL) has fallen 0.90%.
NuStar and most of its peers are still trading below the levels before the rout in energy prices. For a comparable analysis on BPL, MMP, and SXL, read Analyzing Four Major Liquids-Focused MLPs: PAA, MMP, SXL, BPL.
NuStar Energy’s moving averages
NuStar Energy fell below its 50-day SMA (simple moving average) and 200-day SMA following the recent plunge. It’s currently trading 8.4% below its 50-day SMA and 3.4% below its 200-day SMA. That indicates a bearish sentiment.
When a stock’s price exceeds a particular moving average, it’s a bullish sign, and vice versa. When a stock’s shorter moving average crosses over its longer moving average, it’s considered a “buy” signal for the stock.