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Why Revolution Lighting Technologies (RVLT) is Soaring Today

NEW YORK (TheStreet) -- Small-cap Revolution Lighting Technologies (RVLT - Get Report) surged during Monday's session on the news it had been awarded a contract from the U.S. Navy to supply LED lighting technology.

The Stamford, Conn.-based business announced the U.S. Navy's Military Sealift Command would purchase 17,000 of its Seesmart-branded two- and four-foot LED tube lamps to outfit dry cargo and ammunition ships. The Military Sealift Command division provides the Navy and Department of Defense with ocean transportation of goods, navigating around 110 ships to different ports daily.

"We are honored to support the U.S. Navy on this project to implement our high-quality LED tube lamps and drive significant long-term savings," said Revolution Lighting CEO Robert V. LaPenta in a statement. "This project is one more example in a growing list of large-scale installations across a variety of public and private organizations."

Revolution Lighting shares soared 23.6% to $3.51 by mid-morning. Year to date, the stock has achieved 459.3% in gains.

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Despite the growth, TheStreet Ratings team rates Revolution Lighting Technologies as a Sell with a ratings score of D-. The team has this to say about their recommendation:

"We rate Revolution Lighting Technologies (RVLT) a SELL. This is driven by multiple 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 poor profit margins."

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 Electrical Equipment industry. The net income has significantly decreased by 1289.2% when compared to the same quarter one year ago, falling from $0.26 million to -$3.08 million.
  • The gross profit margin for Revolution Lighting Technologies is currently lower than what is desirable, coming in at 25.67%. Regardless of RVLT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, RVLT's net profit margin of -57.97% significantly underperformed when compared to the industry average.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Electrical Equipment industry and the overall market, Revolution Lighting Technologies' return on equity significantly trails that of both the industry average and the S&P 500.
  • Revolution Lighting Technologies 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, Revolution Lighting Technologies reported poor results of -80 cents a share vs. -32 cents a share in the prior year.
  • RVLT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Although the company had a strong debt-to-equity ratio, its quick ratio of 1.00 is somewhat weak and could be cause for future problems.
Also see: The 10 Drunkest States in America... and the 10 Most Sober.

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