Why Revolution Lighting Technologies (RVLT) Stock Is Up Today

NEW YORK (TheStreet) -- Revolution Lighting Technologies (RVLT) stock is gaining Wednesday after announcing it has been awarded a contract to expand LED lighting at nine office properties. SL Green Realty (SLG) selected Revolution Lighting to deliver its Seesmart brand LED tube lamps to retrofit the properties. 

"Revolution Lighting is excited to continue its relationship with SL Green to deliver significant energy efficiency and cost savings through our advanced LED lighting solutions," said Revolution CFO Charles J. Schafer in a statement. "SL Green's continued use of our LED lighting products reflects market confidence in the LED industry, and our capability to deliver leading solutions through our strong distribution network."

By early afternoon, shares had spiked 5.1% to $2.25. 

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Separately, TheStreet Ratings team rates REVOLUTION LIGHTING TECHNLGS as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

"We rate REVOLUTION LIGHTING TECHNLGS (RVLT) a SELL. This is driven by a few notable 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 poor profit margins and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for REVOLUTION LIGHTING TECHNLGS is currently lower than what is desirable, coming in at 33.48%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -70.81% is significantly below that of the industry average.
  • RVLT'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 35.27%, 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.
  • 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, REVOLUTION LIGHTING TECHNLGS's return on equity significantly trails that of both the industry average and the S&P 500.
  • RVLT, with its decline in revenue, underperformed when compared the industry average of 6.2%. Since the same quarter one year prior, revenues fell by 21.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • RVLT's debt-to-equity ratio is very low at 0.11 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.42 is very weak and demonstrates a lack of ability to pay short-term obligations.
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