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Why Ocean Power Technologies (OPTT) Is Up Today

Update (4:24 p.m. EST): Updated with closing price, day high and low prices, price change and volume information.

NEW YORK (TheStreet) -- Ocean Power Technologies  (OPTT) skyrocketed 15.84% to $2.56, up 35 cents from its previous close of $2.21, at the close of the trading day on Tuesday after the company announced that it had reached a funding agreement with the Australian government for $59.8 million (A$66.5 million).

The stock had a volume of 8,527,146, well above its average of 544,033. It hit a high of $3.55 and a low of $2.49 for the day.

The Pennington, N.J.-based renewable energy company announced that Victorian Wave Partners, a group that Ocean Power Technologies owns and that focuses on specific projects, has signed an agreement with the Australian Renewable Energy Agency. The company will use the grant toward the cost of building and deploying a 62.5 megawatt peak-rated wave power station off the coast of Portland, Victoria.

TheStreet Ratings team rates OCEAN POWER TECHNOLOGIES INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate OCEAN POWER TECHNOLOGIES INC (OPTT) a SELL. This is driven by some concerns, 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, weak operating cash flow, poor profit margins and generally disappointing historical performance in the stock itself."

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 Electrical Equipment industry and the overall market, OCEAN POWER TECHNOLOGIES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to -$3.41 million or 16.37% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The gross profit margin for OCEAN POWER TECHNOLOGIES INC is rather low; currently it is at 23.92%. Regardless of OPTT's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, OPTT's net profit margin of -704.95% significantly underperformed when compared to the industry average.
  • In its most recent trading session, OPTT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Electrical Equipment industry average, but is greater than that of the S&P 500. The net income increased by 31.2% when compared to the same quarter one year prior, rising from -$4.75 million to -$3.27 million.
  • You can view the full analysis from the report here: OPTT Ratings Report

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