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Ocean Power Technologies (OPTT) Stock Reverses Tuesday's Rally

Tickers in this article: OPTT

NEW YORK ( TheStreet) --  Ocean Power Technologies  has reversed gains achieved earlier in the week.

By early afternoon, shares had plunged 8.9% to $3.69, lower than Tuesday's high of $4.07. Trading volume of 1.4 million shares was nearly equal to its three-month daily average of 1.9 million.

On Tuesday, the alternative energy stock gained nearly 9% on the announcement it had received A$5 million in initial grant funding from the Australian Renewable Energy Agency. The funding is for Ocean Power's 88%-owned subsidiary Victorian Wave Partners and will be used to fund the construction of its planned wave-power station off the coast of Australia.

Separately, Pennington, N.J.-based Ocean power said U.S. Energy Department had terminated an agreement to deploy a PowerBuoy off the coast of Reedsport, Oregon.

In an SEC filing, the company explained, "The Reedsport project encountered a considerable increase in costs related to the project. The company was unable to obtain the required financing directly related to the completion of the project. In light of the determination to terminate by mutual agreement, the Company and the DOE are discussing the steps necessary to close out the project. The Company does not expect the termination of the contract to have a material impact on its reported financial position."

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OPTT ChartOPTT data by YCharts

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

"We rate OCEAN POWER TECHNOLOGIES INC (OPTT) a SELL. This is driven by several 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. Among the areas we feel are negative, one of the most important has been an overall disappointing return on equity."

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, OCEAN POWER TECHNOLOGIES INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • OPTT, with its very weak revenue results, has greatly underperformed against the industry average of 5.7%. Since the same quarter one year prior, revenues plummeted by 77.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for OCEAN POWER TECHNOLOGIES INC is rather high; currently it is at 55.28%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -371.35% is in-line with the industry average.
  • Net operating cash flow has increased to -$1.57 million or 18.03% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 2.15%.
  • OPTT's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.82, which clearly demonstrates the ability to cover short-term cash needs.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.