A month has gone by since the last earnings report for Westport Innovations (WPRT). Shares have added about 8.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Westport 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 incurred a loss of 22 cents per share in the third quarter of 2024, narrower than the Zacks Consensus Estimate of a loss of 41 cents. The company had incurred a loss of 68 cents in the year-ago period.
WPRT registered consolidated revenues of $66.2 million, missing the Zacks Consensus Estimate of $67 million. The top line also fell from $77.4 million generated in the corresponding quarter of 2023. The company incurred an adjusted EBITDA loss of $0.8 million compared with a loss of $3 million recorded in the year-ago period.
From the third quarter of 2024, Westport has started reporting its results under five reportable segments: Cespira, Light-Duty, High-Pressure Controls and Systems, Heavy-Duty OEM and Corporate. Cespira is Westport’s HPDI joint venture with Volvo Group.
Cespira: The segment reported net sales of $16.2 million and incurred an operating loss of $5.3 million in the third quarter of 2024.
Light-Duty: Net sales of the segment totaled $61.5 million, which increased from $60.2 million in the third quarter of 2023 and surpassed our estimate of $53.2 billion. The upside was mainly due to higher sales in light-duty OEM and IAM businesses.
The segment reported an operating income of $2.4 million against the year-ago quarter’s operating loss of $3 million. The metric surpassed our estimate of $1.9 million. Gross profit rose to $13.9 million (23% of revenues) from the year-ago period’s $12 million (20% of revenues), primarily due to an increase in sales volumes, a change in sales mix with higher sales to European customers and lower sales in developing regions.
High-Pressure Controls and Systems: Net sales of the segment totaled $1.6 million compared with $3.7 million in the year-ago period. The figure missed our estimate of $3 million. A slowdown in building hydrogen infrastructure has resulted in slower adoption of hydrogen-powered solutions in automotive and industrial sectors, which resulted in a year-over-year decline. The segment incurred an operating loss of $1.2 million compared with the operating loss of $0.4 million reported in the corresponding quarter of 2023. The loss was narrower than our estimate of a loss of $1.3 million.
In the reported quarter, gross profit fell $0.6 million to $0.4 million, representing 25% of revenues due to lower sales volume. The company’s gross profit was $1 million or 27% of revenues in the third quarter of 2023.
Heavy-Duty OEM: Net sales of the segment, which includes revenues from the HPDI business from Jan. 1, 2024, to June 3, 2024, totaled $3.1 million. The company reported $13.5 million in the year-ago quarter. The metric missed our estimate of $11.4 million. The year-over-year decline resulted from the transition of this business to Cespira and the consequent change in accounting method. The segment reported an operating income of $0.9 million against the loss of $3.7 million reported in the corresponding quarter of 2023. We estimated an operating loss of $4.2 million.
Gross profit totaled $0.2 million (6% of revenues) compared with $0.2 million (1% of revenues) in the third quarter of 2023.
Corporate: The segment reported an operating loss of $1 million compared with an operating loss of $5 million reported in the year-ago period. The operating loss was narrower than our estimate of a loss of $3.2 million.
Westport had cash and cash equivalents (including restricted cash) of $33.26 million as of Sept. 30, 2024, down from $54.85 million at the end of 2023. Long-term debt decreased to $23.5 million as of Sept. 30, 2024, from $30.96 million as of Dec. 31, 2023.
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 20.13% due to these changes.
At this time, Westport has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Westport has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Westport is part of the Zacks Automotive - Original Equipment industry. Over the past month, BorgWarner (BWA), a stock from the same industry, has gained 0.8%. The company reported its results for the quarter ended September 2024 more than a month ago.
BorgWarner reported revenues of $3.45 billion in the last reported quarter, representing a year-over-year change of -4.8%. EPS of $1.09 for the same period compares with $0.98 a year ago.
BorgWarner is expected to post earnings of $0.92 per share for the current quarter, representing a year-over-year change of +2.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.6%.
BorgWarner has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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