Why Capstone Turbine (CPST) Stock Is Up Today

NEW YORK (TheStreet) -- Capstone Turbine (CPST) was gaining 3.7% to $1.16 Thursday after securing a follow-on order from a top shale producer and Plug Power’s (PLUG) second quarter results.

The company said it received and order for an additional six C600s microturbines totaling 3.6 MW for an independent company operating in the Marcellus and Utica Shale plays.

Plug Power’s second quarter results which easily beat analysts’ estimates are also contributing to Capstone’s gain.

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TheStreet Ratings team rates CAPSTONE TURBINE CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate CAPSTONE TURBINE CORP (CPST) a SELL. This is driven by several 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 weak operating cash flow and poor profit margins."

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

  • Net operating cash flow has declined marginally to -$3.77 million or 4.89% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, CAPSTONE TURBINE CORP has marginally lower results.
  • The gross profit margin for CAPSTONE TURBINE CORP is rather low; currently it is at 18.29%. Regardless of CPST's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CPST's net profit margin of -9.27% significantly underperformed when compared to the industry average.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Electrical Equipment industry and the overall market, CAPSTONE TURBINE CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
  • CAPSTONE TURBINE CORP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CAPSTONE TURBINE CORP continued to lose money by earning -$0.05 versus -$0.07 in the prior year. This year, the market expects an improvement in earnings (-$0.02 versus -$0.05).
  • You can view the full analysis from the report here: CPST Ratings Report

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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.

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