Why ZBB Energy (ZBB) Stock Is Down Today

NEW YORK (TheStreet) -- ZBB Energy (ZBB) was falling 18.1% to $1.18 Friday after announcing the price of its 11.52 million share public offering.

The company priced the 11.52 million share offering at $1.12 a share. The underwriter of the offering have an option to buy up to 1,728,000 shares to cover over-allotments.

ZBB Energy expects gross proceeds of about $14,837,760 and net proceeds of about $13,547,494 from the offering. The company plans to use the proceeds for general corporate purposes and as working capital.

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

"We rate ZBB ENERGY CORP (ZBB) 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 area that we feel has been the company's primary weakness has been its disappointing return on equity."

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

  • 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, ZBB ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for ZBB ENERGY CORP is currently very high, coming in at 86.61%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 0.19% trails the industry average.
  • Net operating cash flow has significantly increased by 125.58% to $0.44 million when compared to the same quarter last year. In addition, ZBB ENERGY CORP has also vastly surpassed the industry average cash flow growth rate of 3.06%.
  • ZBB's debt-to-equity ratio is very low at 0.16 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 3.68, which clearly demonstrates the ability to cover short-term cash needs.
  • This stock has increased by 52.63% 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 ZBB do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • You can view the full analysis from the report here: ZBB 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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