NEW YORK (TheStreet) -- Shares of Clean Diesel Technology (CDTI) were gaining 14.1% to $2.27 on heavy trading volume Monday after the advanced emission control solutions company announced its first major fleet customer for DuraFit, its new line of OEM replacement diesel particulate filters.
CDTi announced that it will supply DuraFit to the New York City Department of Sanitation (DSNY) fleet of vehicles. The DSNY operates the largest municipal-owned sanitation fleet in the world with about 3,000 vehicles, including mechanical street sweepers and refuse collection trucks.
Mondial Automotive, one of CDTi's regional distributors will supply the DuraFit products for the DSNY fleet.
"This important fleet win with the DSNY demonstrates the growing distribution reach of DuraFit, which addresses the $300 million plus replacement filter market," CDTi President and CEO Chris Harris said in a statement.
About 2.1 million shares of CDTi were traded by 10:40 a.m. Monday, above the company's average trading volume of about 242,000 shares a day.
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 generally high debt management risk, disappointing return on equity, poor profit margins, 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 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.
- CDTI's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 25.10%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
- You can view the full analysis from the report here: CDTI Ratings Report