LINN Energy LLC

Estimates have rising for LINN Energy LLC (LINE - Snapshot Report) since the company delivered strong fourth quarter results.

Based on the current Zacks Consensus Estimate, net income per unit is expected to grow by 27% in 2011. The company also pays a distribution that yields an attractive 6.8%.

It is a Zacks #2 Rank (Buy) stock.

Company Description

LINN Energy LLC is an independent oil and gas development company. It is headquartered in Houston, Texas and has a market cap of $5.7 billion.

Fourth Quarter Results

Fourth quarter adjusted net income per unit came in at 43 cents, beating the Zacks Consensus Estimate by 3 cents. It was a 5% increase over the same quarter in 2009.

Average daily production surged 43% year-over-year while adjusted EBITDA from continuing operations, a good measure of the company's cash flow, was up 55% year-over-year.

6.8% Yield

The company used this strong cash flow to pay a quarterly cash distribution of 66 cents per unit, or $2.64 on an annualized basis. This equates to a juicy 6.8% yield.

Estimates Rising

Analysts have been raising their estimates for LINN Energy over the last several months. The Zacks Consensus Estimate for 2011 is $1.95, representing 27% growth over 2010 EPS. The 2012 is currently $2.00, equating to 2% EPS growth.

It is a Zacks #2 Rank (Buy) stock.

Valuation

The stock has soared more than 30% in the last 6 months.

Valuation is still reasonable, however, with shares trading at 19.6x forward earnings, a discount to the industry average of 22.4x. Its price to book ratio of 2.2 is also below the peer group multiple of 2.6.

Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

Read the full analyst report on LINE