Trade-Ideas: ZBB Energy Corporation (ZBB) Is Today's

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.

Trade-Ideas LLC identified ZBB Energy Corporation ( ZBB) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified ZBB Energy Corporation as such a stock due to the following factors:

  • ZBB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $12.4 million.
  • ZBB has traded 170,573 shares today.
  • ZBB is down 14.2% today.
  • ZBB was up 22.3% yesterday.

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More details on ZBB:

ZBB Energy Corporation develops, manufactures, and sells distributed energy storage solutions and systems based upon the proprietary zinc bromide rechargeable electrical energy storage technology and power electronics systems in the United States and internationally.

The average volume for ZBB Energy Corporation has been 481,200 shares per day over the past 30 days. ZBB Energy has a market cap of $36.9 million and is part of the industrial goods sector and industrial industry. The stock has a beta of 2.85 and a short float of 1% with 0.03 days to cover. Shares are up 144.9% year-to-date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates ZBB Energy Corporation as a sell. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:
  • 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. Along with this, the company manages to maintain a quick ratio of 0.22, which clearly demonstrates the inability to cover short-term cash needs.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Electrical Equipment industry and the overall market, ZBB ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to -$2.42 million or 18.55% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • ZBB, with its very weak revenue results, has greatly underperformed against the industry average of 5.8%. Since the same quarter one year prior, revenues plummeted by 65.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 48.65% is the gross profit margin for ZBB ENERGY CORP which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -224.42% is in-line with the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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