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Why Highpower International (HPJ) Stock Is Jumping Today

Stocks in this article: HPJ

NEW YORK (TheStreet) -- Highpower International (HPJ) was gaining 16.3% to $5.64 Wednesday after announcing it is supplying batteries for new Timex smartwatches.

The company said it started shipping advanced compact lithium batteries for the new Timex IRONMON ONE GPS+ smartwatch. The smartwatch offers standalone wireless connectivity, unlike other smartwatches which require a connection to a smartphone.

"We feel that wearables represent an exciting area of growth for mobile devices, and smartwatches could provide a natural progression from current applications to help consumers further embrace wearable technology," Highpower chairman and CEO George Pan said in a press release. "We feel that our battery performance, seamlessness of services, and quality will allow us to compete for a proportionate market share of batteries for these products"

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TheStreet Ratings team rates HIGHPOWER INTERNATIONAL INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate HIGHPOWER INTERNATIONAL INC (HPJ) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, poor profit margins and weak operating cash flow."

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

  • The revenue growth came in higher than the industry average of 6.5%. Since the same quarter one year prior, revenues rose by 22.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electrical Equipment industry. The net income increased by 645.0% when compared to the same quarter one year prior, rising from $0.11 million to $0.81 million.
  • HIGHPOWER INTERNATIONAL INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HIGHPOWER INTERNATIONAL INC reported lower earnings of $0.11 versus $0.13 in the prior year. This year, the market expects an improvement in earnings ($0.21 versus $0.11).
  • Net operating cash flow has declined marginally to -$4.49 million or 3.67% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, HIGHPOWER INTERNATIONAL INC has marginally lower results.
  • 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. To add to this, HPJ has a quick ratio of 0.64, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • You can view the full analysis from the report here: HPJ Ratings Report

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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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