NEW YORK (TheStreet) -- Shares of Westport Innovations (WPRT - Get Report) gained 13.6% to close at $3.92 on Friday after the natural gas engines maker announced a new market development agreement with Gazprom (OGZPY) on Thursday.
The two companies will focus on expanding the use of natural gas vehicles in Russia and the localization of manufacturing of Westport's Emer brand natural gas products under the agreement.
Gazprom currently has 200 compressed natural gas stations in Russia, with plans to invest in upgrading those stations and constructing new stations to reach a total of about 500 fueling stations by 2020. The company expects CNG consumption to grow from 0.4 billion cubic meters in 2013 to 10.4 cubic meters by 2020.
"In addition to assessing localized manufacturing and building relationships with Russian OEMs for vehicle development opportunities, Westport will advise on regulatory requirements to enable effective use of natural gas in transportation," Maurizio Grando, Executive Vice President, Applied Technologies Group at Westport, said in a statement.
About 1.1 million shares of Westport Innovations were traded in regular trading hours Friday, above the company's average trading volume of about 356,000 shares a day.
TheStreet Ratings team rates WESTPORT INNOVATIONS INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
We rate WESTPORT INNOVATIONS INC (WPRT) a SELL. This is driven by a few notable 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 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:
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Machinery industry and the overall market, WESTPORT INNOVATIONS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for WESTPORT INNOVATIONS INC is currently lower than what is desirable, coming in at 34.97%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -73.57% is significantly below that of the industry average.
- WPRT'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 68.53%, 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.
- WPRT, with its decline in revenue, underperformed when compared the industry average of 14.4%. Since the same quarter one year prior, revenues fell by 26.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The current debt-to-equity ratio, 0.56, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.33, which illustrates the ability to avoid short-term cash problems.
- You can view the full analysis from the report here: WPRT