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Why ZBB Energy (ZBB) Soared to a One-Year High Today

NEW YORK (TheStreet) -- ZBB Energy  (ZBB) soared to a one-year high of $2.89 on Wednesday as the energy storage and power control technologies company rose in sympathy with other green energy companies such as Plug Power  (PLUG)FuelCell  (FCEL) and Ballard Power Systems  (BLDP).

The stock amassed a volume of 11,609,550, nearly 50 times its average of 232,320. The activity was unusual enough that the New York Stock Exchange contacted the company and requested that it respond via press release. ZBB Energy stated that "its policy is not to comment on unusual market activity."

The stock holds a one-year low of 40 cents and hit a low of $1.90 for the day. It soared 50.31% to $2.45, up 82 cents from its previous close of $1.63, at the close of the trading day.

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TheStreet Ratings team rates ZBB ENERGY CORP as a "sell" with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

"We rate ZBB ENERGY CORP (ZBB) 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 generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."

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

  • Currently the debt-to-equity ratio of 1.55 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.22, which clearly demonstrates the inability to cover short-term cash needs.
  • 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, ZBB ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • ZBB's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 33.60%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • Net operating cash flow has decreased to -$2.42 million or 18.55% when compared to the same quarter last year. Despite a decrease in cash flow of 18.55%, ZBB ENERGY CORP is in line with the industry average cash flow growth rate of -23.79%.
  • ZBB, with its very weak revenue results, has greatly underperformed against the industry average of 5.7%. Since the same quarter one year prior, revenues plummeted by 65.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • You can view the full analysis from the report here: ZBB Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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