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Why Ocean Power Technologies (OPTT) Is Sliding After Hours

NEW YORK (TheStreet) -- Ocean Power Technologies (OPTT) is sinking in extended trading Thursday after announcing an underwritten public offering.

After the bell, shares slipped 5.3% to $3.60.

The Pennington, N.J.-based business did not disclose the size or terms of the offering, nor when it expected it to be completed.

"The company intends to use the net proceeds of any sale of securities under this prospectus supplement for any combination of working capital, capital expenditures, and general business purposes, including additional development, testing and demonstrations of its PowerBuoy systems," Ocean Power said in a statement.

The company also said it might use proceeds to fund short-term investments in complementary businesses, products and technologies, though it currently has no agreements or commitments other than those publicly disclosed.

Roth Capital Partners is acting as the sole manager for the offering.

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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 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. Among the areas we feel are negative, one of the most important has been an overall disappointing return on equity."

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

  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. 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.
  • OPTT, 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 77.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for OCEAN POWER TECHNOLOGIES INC is rather high; currently it is at 55.28%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -371.35% is in-line with the industry average.
  • Net operating cash flow has increased to -$1.57 million or 18.03% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 2.15%.
  • OPTT's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.82, which clearly demonstrates the ability to cover short-term cash needs.

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