Ballard Power Systems (BLDP) Stock Jumping on China Clean Energy Bus Deal

NEW YORK (TheStreet) -- Shares of Ballard Power Systems Inc. (BLDP) are higher by 9.95% to $2.32 on heavy volume in mid-morning trading on Monday, after the company announced it signed a $10 million agreement with both Nantong Zehe New Energy Technology and Guangdong Synergy Hydrogen Power Technology to provide its products to support the deployment of fuel cell powered buses in two cities in China.

Ballard Power will provide fuel cell power products and technology solutions for the support of 33 buses to be launched in the cities of Rugao and Yunfu.

The majority of the deal's value is expected to be recognized in 2015, Ballard said in a statement announcing the deal.

So far today, 3.11 million shares of Ballard Power have exchanged hands as compared to its average daily volume of 704,000 shares.

"We continue to see strong growth opportunities in China's mass transit market where fuel cells are increasingly being discussed as the next generation of clean propulsion. This demand is being driven by China's growing need for clean urban mass transit and air quality policies," Ballard Power CEO Randy MacEwen said in a statement.

Separately, TheStreet Ratings team rates BALLARD POWER SYSTEMS INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate BALLARD POWER SYSTEMS INC (BLDP) a SELL. This is driven by some concerns, 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 disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself."

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

  • 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 Electrical Equipment industry and the overall market, BALLARD POWER SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for BALLARD POWER SYSTEMS INC is rather low; currently it is at 22.42%. It has decreased significantly from the same period last year. Despite the weak results of the gross profit margin, the net profit margin of 75.75% has significantly outperformed against the industry average.
  • BLDP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 42.04%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • BLDP, with its decline in revenue, underperformed when compared the industry average of 11.8%. Since the same quarter one year prior, revenues fell by 33.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • BALLARD POWER SYSTEMS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, BALLARD POWER SYSTEMS INC's EPS of -$0.21 remained unchanged from the prior years' EPS of -$0.21. This year, the market expects an improvement in earnings (-$0.07 versus -$0.21).
  • You can view the full analysis from the report here: BLDP Ratings Report

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