NEW YORK (TheStreet) -- Shares of Clean Diesel Technologies (CDTI) were gaining 26.5% to $2.34 on heavy trading volume Tuesday after the emission control technology company released preliminary results for its new synergized-platinum group metal (SPGM) diesel oxidation catalyst (DOC) technology.
In its initial tests, CDTi said its new technology achieved emission control and system performance comparable to a leading OEM catalyst while reducing PGM usage by over 80%.
The company said the technology represents "another breakthrough" in its research program aimed at reducing or eliminating the need for PGMs in emission control catalysts. The company plans to commercialize its SPGM DOC technology through OEMs and retrofit catalyst suppliers through its powder-to-coat business model.
"These initial engine and vehicle tests for our SPGM DOC technology are the first in a series of key development milestones," CDTi President and CEO Chris Harris said in a statement. "They further demonstrate our ability to invent innovative materials to create significant value propositions in a range of downstream markets."
About 4.5 million shares of CDTi were traded by 11:49 a.m. Tuesday, above the company's average trading volume of about 152,000 shares a day.
TheStreet Ratings team rates CLEAN DIESEL TECHNOLOGIES as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate CLEAN DIESEL TECHNOLOGIES (CDTI) a SELL. This is driven by multiple 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 generally high debt management risk, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio of 1.48 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 0.75, which illustrates the inability to avoid short-term cash problems.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. 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 gross profit margin for CLEAN DIESEL TECHNOLOGIES is currently lower than what is desirable, coming in at 25.62%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -31.62% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$2.69 million or 235.48% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- CDTI has underperformed the S&P 500 Index, declining 22.50% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- You can view the full analysis from the report here: CDTI Ratings Report