A month has gone by since the last earnings report for Westport Fuel Systems Inc. (NASDAQ:WPRT) . Shares have added about 21.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Westport Fuel Systems Q4 Loss Wider than Expected
Westport Fuel Systems adjusted loss came in at $0.24 per share in the fourth quarter of 2016, narrower than the year-ago loss of $0.35. However, the adjusted loss, which excludes $0.19 from non-recurring items, was wider than the Zacks Consensus Estimate of a loss of $0.15. Including non-recurring items, net loss amounted to $43.2 million or $0.43 per share in the reported quarter. The reported net loss for the fourth quarter of 2015 was $24.5 million.
Westport Fuel Systems logged revenues of $80.4 million in the reported quarter, up 220.3% year over year. The growth was primarily driven by the addition of Fuel Systems’ revenues. Moreover, the top line surpassed the Zacks Consensus Estimate of $74 million.
Consolidated gross margin increased to $18.6 million (23.1% of sales) in the fourth quarter of 2016 from $3.1 million (12.4% of sales) in the year-ago quarter. The improvement in gross margin percentage was mainly due to the merger as well as improved operating performance. Consolidated adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) amounted to a negative $11.9 million, compared with a negative $10.3 million in the fourth quarter of 2015.
Full-Year 2016 Performance
Westport Fuel Systems’ adjusted loss came in at $1.20 per share in 2016, narrower than a loss of $1.53 incurred in 2015. However, the loss was wider than the Zacks Consensus Estimate of a loss of $1.10. Consolidated revenues for the company were $224.9 million in 2016, up 117.7% from $103.3 million in the prior year, mainly due the merger. However, the top line beat the Zacks Consensus Estimate of $219 million.
Segment Details
Automotive Business Unit recorded a 112.6% increase in revenues to $55.7 million in the quarter due to the addition of Fuel Systems' revenues. Gross margin increased to $11.2 million (20%) from $6 million (11.8%) in the prior-year quarter.
Industrial Business Unit reported revenues of $23.8 million, which were solely generated from the Fuel Systems business. Gross margin was pegged at $6.7 million (28.2%).
Corporate and Technology Investments Business Unit revenues were $0.9 million in the quarter, compared to negative revenues of $1.4 million in the year-ago period.
The CWI joint venture recorded a 17% decrease in revenues to $55.4 million, mainly owing to persistent market headwinds and lower engine sales, offset partly by higher parts revenue. CWI operating income attributable to Westport Fuel Systems was $1.2 million in the reported quarter compared with $3.1 million in the year-ago period.
Financial Position
Westport Fuel Systems had cash and cash equivalents of $60.1 million as of Dec 31, 2016, up from $27.1 million as of Dec 31, 2015. Long-term debt was $79 million as of Dec 31, 2016, up from $62.4 million as of Dec 31, 2015. In 2016, Westport Fuel Systems’ cash used in operations was $79.6 million, compared with $69.1 million in the year-ago period.
The company has not provided any guidance for revenues or earnings. It is in the final development stage of the launch of commercial components of HPDI 2.0.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Westport's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with a 'D'. Charting a somewhat similar path, the stock was allocated a grade of 'F' on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our styles scores, the stock is suitable solely for growth investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
Westport Fuel Systems Inc (WPRT): Free Stock Analysis Report
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