Westport Fuel Systems Inc. WPRT, a developer, manufacturer and supplier of advanced alternative fuel systems and components, is likely to gain from its portfolio of eco-friendly products. However, it lacks sufficient liquidity, and foreign exchange risk continues to be a headwind.
Let’s see why you should retain this Zacks Rank #3 (Hold) stock in your portfolio.
Westport’s portfolio of eco-friendly products positions it to capitalize on climate change mandates across the world. Its HPDI fuel system — which is a fully integrated OEM gaseous fuels system that allows diesel engines to operate with various clean-burning fuels — offers an environment-friendly, robust performance for heavy-duty trucks, positioning the company favorably as the transition to green transportation solutions intensifies. The firm expects HPDI volumes to be a significant driver of revenues. The formation of Cespira, Westport’s HPDI joint venture with Volvo, launched in June 2024, to accelerate the commercialization and global adoption of Westport's HPDI technology in its long-haul and off-road applications, augurs well.
In 2022, a European OEM awarded the company two programs to develop and supply LPG systems for a number of its vehicles, known as the Euro 6 and Euro 7 LPG programs. These programs are projected to generate nearly EUR255 million in revenues through 2028. Euro 6 deliveries commenced in the first quarter of 2024 and have played an instrumental role in improving the company’s revenues and delivering higher margins. The Euro 7 deliveries are expected to start by mid to late 2025.
Westport has announced the sale of its light-duty business to strengthen its balance sheet. The transaction is expected to simplify Westport’s competitive strategy and streamline operations, enabling a sharper focus on HPDI technology through the Cespira joint venture and its high-pressure controls and systems business — areas with the strongest growth potential. The deal is anticipated to close by the end of second-quarter 2025.
Westport's ongoing operating losses and reliance on cash to fund its activities signal financial strain. The company lacks sufficient liquidity to meet projected capital expenditures, debt obligations and operational needs over the next 12 months. This shortfall raises significant doubt about Westport’s ability to continue as a going concern. Without additional funding or strategic changes, the company may face serious financial challenges.
While the company reports its financial results in U.S. dollars, many of its expenses are incurred in Canadian dollars and euros. This can lead to potential foreign exchange gains and losses in operating results. A weakening of the U.S. dollar against the Canadian dollar or the euro could negatively impact the company’s margins and other financial metrics. Westport does not use foreign exchange contracts to hedge against currency fluctuations.
Some better-ranked stocks in the auto space are China Yuchai International Limited CYD, Suzuki Motor Corporation SZKMY and Strattec Security Corporation STRT, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CYD’s 2025 sales and earnings indicates year-over-year growth of 9.17% and 36.84%, respectively. EPS estimates for 2025 have improved 25 cents in the past 60 days.
The Zacks Consensus Estimate for SZKMY’s 2025 sales and earnings implies year-over-year growth of 8.59% and 48.43%, respectively. EPS estimates for 2025 and 2026 have improved 56 cents and 39 cents, respectively, in the past 60 days.
The Zacks Consensus Estimate for STRT’s 2025 sales indicates year-over-year growth of 2.61%. EPS estimates for 2025 and 2026 have improved 91 cents and $1.06, respectively, in the past 60 days.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Westport Fuel Systems Inc. (WPRT) : Free Stock Analysis Report
Strattec Security Corporation (STRT) : Free Stock Analysis Report
Suzuki Motor (SZKMY) : Free Stock Analysis Report
China Yuchai International Limited (CYD) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
免責聲明：投資有風險，本文並非投資建議，以上內容不應被視為任何金融產品的購買或出售要約、建議或邀請，作者或其他用戶的任何相關討論、評論或帖子也不應被視為此類內容。本文僅供一般參考，不考慮您的個人投資目標、財務狀況或需求。TTM對信息的準確性和完整性不承擔任何責任或保證，投資者應自行研究並在投資前尋求專業建議。