By early afternoon Wednesday, shares had tumbled 7.3%. Trading volume of 3.2 million was nearly triple its three-month daily average.
The nano-cap exploded 74.2% over Tuesday's session after announcing it had received a new Honda (HMC) vehicle award. The Ventura, Calif.-based business said it had begun the manufacture of catalysts featuring its high-performance Mixed Phase Catalyst (MPC) technology for the Honda 2015 Acura TLX model.
The developer of engine and emissions-control systems said it expects shipments of the catalysts to commence in the first half of 2015.
Clean Diesel also provided its catalyst solutions to other Honda models including the North American versions of its four- and six-cylinder Accord, Acura TS and RLX.
"Having our advanced catalyst technologies on a growing number of Honda vehicle platforms (currently 6) is a testament to CDTi's ability to provide market-leading solutions to our customers. The demand for greater emission reduction continues to grow across all vehicle segments," said Clean Diesel CEO Nikhil Mehta in a statement. "Our MPCtechnology is well suited to meet this trend."
Must read: Warren Buffett's 10 Favorite Stocks
TheStreet Ratings team rates CLEAN DIESEL TECHNOLOGIES as a Sell with a ratings score of E+. The team has this to say about their recommendation:
"We rate CLEAN DIESEL TECHNOLOGIES (CDTI) a SELL. This is based on some significant below-par investment measures, which should drive this stock to significantly underperform the majority of stocks that we rate. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, weak operating cash flow and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio of 1.47 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, CDTI has a quick ratio of 0.66, this demonstrates the lack of ability of the company to cover short-term liquidity 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 Chemicals 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.
- Net operating cash flow has significantly decreased to -$0.08 million or 104.95% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The gross profit margin for CLEAN DIESEL TECHNOLOGIES is currently lower than what is desirable, coming in at 32.36%. Regardless of CDTI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CDTI's net profit margin of -7.67% significantly underperformed when compared to the industry average.
- CDTI, with its decline in revenue, underperformed when compared the industry average of 13.6%. Since the same quarter one year prior, revenues slightly dropped by 1.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: CDTI Ratings Report