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Why NF Energy Saving (NFEC) Stock Is Exploding Today

Stocks in this article: NFEC

NEW YORK (TheStreet) -- NF Energy Saving  (NFEC) soared more than 95% on  Tuesday after the company announced it had signed a contract with Water Diversion Works to deliver valve equipment.

The company said it signed two contracts with the Water Diversion Project in March 2014 for its water transferring infrastructure systems among provinces in northern China. NF Energy Saving will provide Water Diversion with $15 million worth of butterfly valve flow control equipment. The company should deliver the orders between July 2014 and March 2015.

"Aiming to improve the water supply for industrial and residential needs in cities and rural communities of the target regions, the Water Diversion Project is a major water works project under national planning, strategically important to regional economic development and the betterment of people's life in northern China," said Chairman Gang Li in a company statement. 

Must Read: Warren Buffett's 25 Favorite Stocks

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The stock was up 96.13% to $2.29 at 12:59 p.m.

Separately, TheStreet Ratings team rates NF ENERGY SAVING CORP as a "sell" with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate NF ENERGY SAVING CORP (NFEC) 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 feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and poor profit margins."

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

  • NF ENERGY SAVING CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, NF ENERGY SAVING CORP swung to a loss, reporting -$0.03 versus $0.01 in the prior year.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Machinery industry. The net income has significantly decreased by 419.1% when compared to the same quarter one year ago, falling from $0.07 million to -$0.22 million.
  • 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 Machinery industry and the overall market, NF ENERGY SAVING CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for NF ENERGY SAVING CORP is currently lower than what is desirable, coming in at 31.18%. Regardless of NFEC's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, NFEC's net profit margin of -13.86% significantly underperformed when compared to the industry average.
  • The revenue fell significantly faster than the industry average of 6.5%. Since the same quarter one year prior, revenues fell by 48.2%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: NFEC 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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