NEW YORK (TheStreet) -- Shares of Clean Diesel Technologies (CDTI) surged 12.68% to $3.57 in morning trading Tuesday after the emission control technology company announced it had raised approximately $4.4 million in gross proceeds through an offering of common stock and warrants to a single institutional investor.
Net proceeds from the offering, which the company expects to close on November 7, will total approximately $3.8 million.
The investor has purchased 1,553,571 shares of common stock for $2.80 a share, with 168,571 of shares in the form of penny warrants acquired for $2.79 per warrant. The investor will also receive regular warrants to acquire 388,393 additional shares for $3.25 a share.
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The penny warrants will expire in six months, while the regular warrants will expire five years from the date of issuance.
More than 4 million shares had changed hands as of 9:52 a.m., compared to the average volume of 922,822.
Separately, TheStreet Ratings team rates CLEAN DIESEL TECHNOLOGIES as a "sell" with a ratings score of E+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CLEAN DIESEL TECHNOLOGIES (CDTI) a SELL. This is based on several weak investment measures, which should drive this stock to significantly underperform the majority of stocks that we rate. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, weak operating cash flow and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio of 1.15 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, CDTI maintains a poor quick ratio of 0.81, which illustrates the inability to avoid short-term cash problems.
- Net operating cash flow has significantly decreased to -$2.51 million or 328.37% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The gross profit margin for CLEAN DIESEL TECHNOLOGIES is currently lower than what is desirable, coming in at 33.59%. Regardless of CDTI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CDTI's net profit margin of -9.44% significantly underperformed when compared to the industry average.
- 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 Auto Components industry and the overall market, CLEAN DIESEL TECHNOLOGIES's return on equity significantly trails that of both the industry average and the S&P 500.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Auto Components industry average, but is greater than that of the S&P 500. The net income increased by 13.2% when compared to the same quarter one year prior, going from -$1.37 million to -$1.19 million.
- You can view the full analysis from the report here: CDTI Ratings Report