NEW YORK (TheStreet) -- Clean Diesel Technologies (CDTI) shares are falling, down 10.32% to $2.26 on heavy volume in early market trading, after the company announced the pricing of a secondary offering of 2.5 million shares at $2.05 per share.

The company hopes to raise $5.1 million from the offering with net proceeds totaling approximately $4.5 million after factoring in underwriting discounts, commissions and expense reimbursements.

The company said that it plans to use the proceeds for general corporate purposes. 

Oxnard, CA-based Clean Diesel Technologies produces emission control products for diesel and light duty vehicles. 

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TheStreet Ratings team rates CLEAN DIESEL TECHNOLOGIES as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CLEAN DIESEL TECHNOLOGIES (CDTI) 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. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, poor profit margins and weak operating cash flow."

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 significantly underperformed compared to the Auto Components industry average, but is greater than that of the S&P 500. The net income has decreased by 9.8% when compared to the same quarter one year ago, dropping from -$2.50 million to -$2.74 million.
  • The debt-to-equity ratio of 1.48 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, CDTI maintains a poor quick ratio of 0.75, which illustrates the inability to avoid short-term cash problems.
  • 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 Auto Components industry and the overall market, CLEAN DIESEL TECHNOLOGIES's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for CLEAN DIESEL TECHNOLOGIES is currently lower than what is desirable, coming in at 25.62%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -31.62% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$2.69 million or 235.48% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: CDTI Ratings Report