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Why Solazyme (SZYM) Is Soaring Today

Stocks in this article: SZYM

NEW YORK (TheStreet) -- Solazyme  (SZYM) was soaring 30.4% to $12.74 on Friday afternoon after the renewable oil maker announced that it has commenced commercial operations of its Tailored oil products from two of its facilities in Iowa.

The company, which makes renewable oil from algae, announced that "truckloads of product" are currently shipping from the Iowa locations for use in lubricants, metalworking and home and personal care, according to the company's statement. The news out of Iowa comes after Solazyme announced in November that it would push the timeline for commercial oil production at its Moema plant in Brazil into the first quarter.

The stock hit a high of $13.08 as of 3:30 p.m. on Friday, one cent below its one-year high of $13.09. Volume for the day was more than 3.7 million, well above its average of 731,008.

TheStreet Ratings team rates SOLAZYME INC as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate SOLAZYME INC (SZYM) a SELL. This is driven by several 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 feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • SOLAZYME INC's earnings per share declined by 27.0% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, SOLAZYME INC reported poor results of -$1.37 versus -$0.92 in the prior year. For the next year, the market is expecting a contraction of 23.4% in earnings (-$1.69 versus -$1.37).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 36.4% when compared to the same quarter one year ago, falling from -$22.50 million to -$30.70 million.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, SOLAZYME 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 -$19.65 million or 28.61% 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.
  • Despite currently having a low debt-to-equity ratio of 0.55, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 10.15 is very high and demonstrates very strong liquidity.
  • You can view the full analysis from the report here: SZYM Ratings Report

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