Why PowerSecure International (POWR) Stock Is Gaining This Morning

NEW YORK (TheStreet) -- Shares of PowerSecure International Inc.  (POWR) are higher by 15.21% to $9.09 on Wednesday morning after the company announced it has improved its terms of service agreement with one of its major utility customers, although the company did not give the customer's name.

PowerSecure provides products and services to electric utilities and their commercial, institutional and industrial customers.

The company said the improved terms of service agreement will include adjustments to pricing, work assignments, and restore the profitability of the work it provides its utility customer.

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In addition, PowerSecure also announced it plans to "vigorously defend" itself against claims it was hiding information from shareholders regarding a shift in profit assignments which negatively affected operations and utility service performance, and that the company was experiencing productivity losses.

These and other claims were disclosed in a class action lawsuit filed in the U.S. Court in the eastern district of California last month.

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 robust revenue growth and largely solid financial position with reasonable debt levels by most measures. 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:

  • The revenue growth came in higher than the industry average of 6.4%. Since the same quarter one year prior, revenues rose by 17.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • POWR's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.64, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to its price level of one year ago, POWR is down 46.18% to its most recent closing price of 8.31. Looking ahead, our view is that this company's fundamentals will not have much impact either way, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • The gross profit margin for POWERSECURE INTL INC is rather low; currently it is at 21.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -8.06% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$12.27 million or 609.55% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: POWR Ratings Report
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