Ballard Power Systems (BLDP) Stock Gains on Joint Development Agreement

NEW YORK (TheStreet) -- Shares of Ballard Power Systems (BLDP - Get Report ) were gaining 5.98% to $1.24 on heavy trading volume Monday after the clean energy products company signed a joint development and supply agreement with Chinese rolling stock manufacturer CRRC Qingdao Sifang Co. valued at $6 million.

Under the new agreement the two companies will develop and commercialize a fuel cell engine specifically designed for integration into low floor trams manufactured by CRRC Sifang. The agreement will include the delivery of 10 custom FCvelocity modules in 2016.

Ballard said it plans to develop a new prototype of its FCVelocity fuel cell module to deliver 200 kW of net power for use in powering trams in urban deployments.

"We are pleased with the strong relationship we are developing with CRRC Sifang, a company with a rich history of innovation in Chinese rail transit, to pursue the China market opportunity for fuel cell powered trams," Randy MacEwen President and CEO said in a statement.

About 1.1 million shares of Ballard were traded by 10:34 a.m. Monday, above the company's average trading volume of about 913,000 shares a day.

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 deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself.

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

• The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Electrical Equipment industry. The net income has significantly decreased by 64.7% when compared to the same quarter one year ago, falling from -$4.46 million to -$7.34 million.
• Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. 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 18.66%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -65.68% is significantly below that of the industry average.
• Net operating cash flow has significantly decreased to -$5.29 million or 79.33% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
• Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 63.93%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 100.00% compared to the year-earlier 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.
• You can view the full analysis from the report here: BLDP