Why Is Westport (WPRT) Down 19.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Westport Innovations (WPRT). Shares have lost about 19.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Westport due for a breakout? 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 catalysts.
Westport Q2 Loss In Line With Estimates, Sales Rise Y/Y
Westport Fuel Systems Inc. incurred a loss of 60 cents per share in second-quarter 2023, in line with the Zacks Consensus Estimate. The loss narrowed from 70 cents per share incurred in the year-ago period.
Westport registered consolidated revenues of $85.02 million in the quarter, topping the Zacks Consensus Estimate of $85 million. The top line also rose from $80 million generated in the corresponding quarter of 2022.
The company delivered an adjusted EBITDA of negative $4 million in the quarter under review compared with negative $4.3 million recorded in the year-ago period.
Segmental Takeaways
Original Equipment Manufacturer (OEM): Net sales of the segment totaled $52.4 million, down from $54.3 million in the second quarter of 2022. The decline was mainly due to lower sales to Indian customers in the light-duty OEM business and lower sales volumes in the hydrogen and heavy-duty OEM businesses. However, the metric surpassed our estimate of $50.9 million.
The segment reported an operating loss of $7.3 million, wider than $5.6 million incurred in the year-ago period. Gross margin increased to $8.4 million year over year, driven by increased sales volumes in delayed OEM and fuel storage businesses, higher spare parts sales, higher unit pricing on HPDI system sales and higher engineering service revenues.
Independent Aftermarket (IAM): Net sales of the segment totaled $32.6 million compared with $25.7 million in the year-ago period. The metric missed our estimate of $33.5 million. In the quarter, the gross margin rose $0.2 million to $6 million, representing 18% of revenues. This compares to $5.8 million in the second quarter of 2022. Higher sales volumes in South America aided results.
Financials
Westport had cash and cash equivalents of $52.3 million as of Jun 30, 2023, down from $86.2 million at the end of 2022. Long-term debt decreased to $26.9 million at the end of second-quarter 2023 from $32.2 million on Dec 31, 2022. Net cash used in operating activities was $41 million in the quarter under review.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -12.41% due to these changes.
VGM Scores
Currently, Westport has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Westport has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Westport belongs to the Zacks Automotive - Original Equipment industry. Another stock from the same industry, Allison Transmission (ALSN), has gained 1.1% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
Allison Transmission reported revenues of $783 million in the last reported quarter, representing a year-over-year change of +17.9%. EPS of $1.92 for the same period compares with $1.26 a year ago.
For the current quarter, Allison Transmission is expected to post earnings of $1.71 per share, indicating a change of +17.9% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for Allison Transmission. Also, the stock has a VGM Score of C.
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Westport Fuel Systems Inc. (WPRT) : Free Stock Analysis Report
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