Ballard Power Systems (BLDP) Stock Rising on Latest China Deal

NEW YORK (TheStreet) -- Shares of Ballard Power Systems (BLDP) are higher by 5.95% to $2.40 in mid-morning trading on Wednesday, after the clean energy products provider announced it signed an agreement for the development of fuel cell modules to power trams in China.

The company has signed a framework agreement with Tangshan Railway Vehicle Co. for the development of a new fuel cell modules that will be designed to meet the requirements of ground transport vehicle applications.

"TRC trams will use next-generation Ballard fuel cell power modules designed specifically for this application. Initial work is expected to involve technology solutions provided by Ballard to assist in the design and integration of a fuel cell power module into TRC tram equipment, with the goal of powering a GTV prototype in 2016," the company said in a statement.

This is the second announcement this week from Ballard regarding a deal to provide clean energy services for transportation options in China.

On Monday, Ballard signed a $10 million deal to power 33 clean energy buses in two Chinese towns. Ballard's stock rose on Monday following the announcement.

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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