NEW YORK (TheStreet) -- In what is turning out to be a positive day for alternative fuel-cell developers, Ballard Power Systems (BLDP) soared 25.2% to $1.79 by mid-morning Friday. The micro-cap has risen 35.6% this week.
The Canada-based business is making gains after signing a non-binding memorandum of understanding with Van Hool NV, Europe's fourth-largest bus manufacturer, to develop zero-emission fuel-cell vehicles. Van Hool has committed to 27 fuel-cell buses, powered by Ballard technology, in operation across Europe through 2014.
Together, the companies plan to file funding proposals to the European Union's Hydrogen Fuel Cell Joint Undertaking by February 2014 and additional proposals to the EU's Horizon 2020 initiative. The former is a public-private partnership supporting research into fuel cell and hydrogen energy technologies; the latter focuses on a dramatic reduction of pollution in the Mediterranean over the next six years.
"We are very pleased to partner with Van Hool in our application for EU funding to support the deployment of additional fuel cell-powered buses," said Ballard CEO John Sheridan in a statement. "This will help generate economies of scale that we expect to drive further overall cost reduction."The positive developments weren't enough to warrant a rating change from TheStreet Ratings team which kept it at a "sell" with a ratings score of D-. The team has this to say about its recommendation: "We rate Ballard Power Systems (BLDP) a SELL. This is driven by a few notable 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 disappointing return on equity and weak operating cash flow." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Auto Components industry and the overall market, Ballard Power Systems' return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$4.84 million or 276.8% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Ballard Power Systems reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, Ballard Power Systems reported poor results of -47 cents a share vs. -39 cents a share in the prior year.
- 36.56% is the gross profit margin for Ballard Power Systems which we consider to be strong. 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 -26.51% is in-line with the industry average.
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Auto Components industry average. The net income increased by 49.6% when compared to the same quarter one year prior, rising from -$8.95 million to -$4.51 million.
- You can view the full analysis from the report here: BLDP Ratings Report
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