Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Revolution Lighting Technologies (RVLT) were glowing today, climbing as much as 13% after a strong second-quarter earnings report.
So what: The development-stage LED lighting-specialist said that revenue in the quarter grew 598% from $1.1 million a year ago to $7.4 million, while its operating loss improved from $5.6 million to $1.3 million. Revolution's per-share loss came in at $0.07 versus $0.35 a year ago, but there aren't any analysts currently following the stock, so we can't make comparisons to estimates.
Nearly all of the quarter's revenue came from the acquisition of Seesmart, another LED-maker, as Revolution, formerly known as NEXXUS Lighting, shifts away from the retail market and toward the higher-margin commercial, industrial, and municipal market.
Now what: Unfortunately, organic revenue fell for Revolution, down from $1.1 million to $0.9 million, indicating that its growth was an entirely acquisition-driven. Revolution shares have jumped an unbelievable 2,500% in the past year, but with a sky-high price-to-sales ratio and no profits to show, the speculation boom has slowed of late. While the numbers are moving in the right direction, Revolution is far from the only player in LED, and I see little reason to justify such a high valuation. After an early jump, shares finished up just 2.3%, indicating that investors may feel the same.