NEW YORK (TheStreet) -- Cadiz (CDZI) - Get Cadiz Inc. Report stock is surging by 26.74% to $5.28 on heavy trading volume on Wednesday, after the company announced a new leasing agreement with Water Asset Management.
As part of the agreement, Water Asset Management will lease land from Cadiz in San Bernardino County, California and pay a one-time fee of $12 million, according to an SEC filing on Wednesday.
Additionally, Cadiz will negotiate with Water Asset Management over leasing 7,500 acres of land at a proposed price of $43 million, the filing said. As part of the agreement, Cadiz will not solicit competing proposals for the land.
Cadiz is a land and water resource development company with acreage in three areas of eastern San Bernardino County, California.
So far today, 1.25 million shares of Cadiz have traded, versus its 30-day average of about 135,000 shares.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate CADIZ INC as a Sell with a ratings score of D-. 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 deteriorating net income, weak operating cash flow and generally disappointing historical performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Water Utilities industry average. The net income has significantly decreased by 30.6% when compared to the same quarter one year ago, falling from -$4.57 million to -$5.97 million.
- Net operating cash flow has significantly decreased to -$4.09 million or 111.43% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Looking at the price performance of CDZI's shares over the past 12 months, there is not much good news to report: the stock is down 64.28%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier 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.
- CADIZ INC's earnings per share declined by 17.9% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, CADIZ INC continued to lose money by earning -$1.15 versus -$1.46 in the prior year.
- The revenue fell significantly faster than the industry average of 5.7%. Since the same quarter one year prior, revenues fell by 25.6%. 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: CDZI