The small-cap jumped after announcing it had received orders for two Capstone C1000s and 25 Capstone C65 microturbines from Horizon Power Systems for use in oil and gas production in the Permian Basin, a site beneath west Texas and southeast New Mexico.
Capstone's involvement marks the first time the Chatsworth, Calif.-based business will have a multiple megawatt project at the site, an area believed to be on the verge of explosive oil and gas production growth.
"This sale the first multiple megawatt Capstone microturbine installation in thePermian Basinfollows several other C65s and C30s already in place there. Low-emission, low-noise, and low-maintenance Capstone microturbines are the go-to solution for running onsite equipment and meeting customers' power requirements in thePermian Basin," said Horizon President Sam Henry in a statement.TheStreet Ratings team rates CAPSTONE TURBINE CORP as a Sell with a ratings score of D. The team has this to say about their recommendation: "We rate CAPSTONE TURBINE CORP (CPST) 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. Among the areas we feel are negative, one of the most important has been poor profit margins." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for CAPSTONE TURBINE CORP is rather low; currently it is at 15.73%. Regardless of CPST's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CPST's net profit margin of -11.01% significantly underperformed when compared to the industry average.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Electrical Equipment industry and the overall market, CAPSTONE TURBINE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- 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 37.1% when compared to the same quarter one year prior, rising from -$6.18 million to -$3.89 million.
- CAPSTONE TURBINE CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, CAPSTONE TURBINE CORP's EPS of -$0.07 remained unchanged from the prior years' EPS of -$0.07. This year, the market expects an improvement in earnings (-$0.05 versus -$0.07).
- This stock has increased by 75.83% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in CPST do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
- You can view the full analysis from the report here: CPST Ratings Report