Perilous Reversal Stock: Hydrogenics Corporation (HYGS)

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

  • HYGS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $12.5 million.
  • HYGS has traded 95,648 shares today.
  • HYGS is down 3.3% today.
  • HYGS was up 7.9% yesterday.

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More details on HYGS:

Hydrogenics Corporation, together with its subsidiaries, designs, develops, and manufactures hydrogen generation products based on water electrolysis technology and fuel cell products based on proton exchange membrane technology in Canada and internationally. Currently there are 2 analysts that rate Hydrogenics Corporation a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Hydrogenics Corporation has been 116,700 shares per day over the past 30 days. Hydrogenics has a market cap of $267.4 million and is part of the industrial goods sector and industrial industry. Shares are up 54.9% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Hydrogenics Corporation as a sell. Among the areas we feel are negative, one of the most important has been poor profit margins.

Highlights from the ratings report include:
  • The gross profit margin for HYDROGENICS CORP is currently lower than what is desirable, coming in at 31.34%. Regardless of HYGS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, HYGS's net profit margin of -5.31% significantly underperformed when compared to the industry average.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Electrical Equipment industry and the overall market, HYDROGENICS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • HYDROGENICS CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, HYDROGENICS CORP reported poor results of -$1.73 versus -$1.66 in the prior year.
  • HYGS's debt-to-equity ratio is very low at 0.19 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.88 is somewhat weak and could be cause for future problems.
  • This stock has increased by 249.05% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in HYGS do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

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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