NEW YORK (TheStreet) -- Shares of Digital Power Corp. (DPW) are up 25.65% to $1.47 on very heavy trading volume after the company announced it was awarded two contracts, one to develop a custom switching power solutions for cloud based data centers, and the other to develop a custom power solution for converged cable TV edge router and gateway nodes.
The manufacturer of PV Solar mounting solutions for commercial and residential solar panel installations expects to generate $1.3 million each year for five years from the contracts.
"We hope that these engagements will lead to additional opportunities to serve these growing market segments," said president and CEO Amos Kohn.
TheStreet Ratings team rates DIGITAL POWER CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate DIGITAL POWER CORP (DPW) 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, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 6.5%. Since the same quarter one year prior, revenues rose by 18.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- DPW has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.69, which clearly demonstrates the ability to cover short-term cash needs.
- 43.26% is the gross profit margin for DIGITAL POWER CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 5.63% trails the industry average.
- DIGITAL POWER 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, DIGITAL POWER CORP reported poor results of -$0.09 versus -$0.05 in the prior year.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Electrical Equipment industry and the overall market, DIGITAL POWER CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: DPW Ratings Report