NEW YORK (TheStreet) -- Shares ofPowerSecure International Inc. (POWR) closed higher today, up 8.53% to $8.91, after acquiring the data center energy services business Power Design Inc.for $13 million, the company announced.
In the trailing 12-month period from the third quarter of 2013 through the second quarter of 2014, Power Design generated more than $24 million in revenue, which resulted in approximately $7.8 million of pre-tax operating income, according to an 8-K filing.
The company, which provides products and services to electric utilities, expects the acquisition to be slightly dilutive to earnings per share in the fourth quarter of 2014, and meaningfully accretive to EPS in 2015.
Separately, TheStreet Ratings team rates POWERSECURE INTL INC as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate POWERSECURE INTL INC (POWR) 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 largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- POWR's debt-to-equity ratio is very low at 0.16 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, POWR has a quick ratio of 2.13, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has significantly increased by 217.37% to $7.67 million when compared to the same quarter last year. In addition, POWERSECURE INTL INC has also vastly surpassed the industry average cash flow growth rate of 4.16%.
- POWR, with its decline in revenue, underperformed when compared the industry average of 6.0%. Since the same quarter one year prior, revenues fell by 18.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Electrical Equipment industry and the overall market, POWERSECURE INTL INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for POWERSECURE INTL INC is currently lower than what is desirable, coming in at 25.11%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -4.81% is significantly below that of the industry average.
- You can view the full analysis from the report here: POWR Ratings Report