Why Westport Innovations Inc. Shares Skyrocketed

Is this meaningful or just another movement?

May 2, 2014 at 5:00PM

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 alternative fuel technologist Westport Innovations (NASDAQ:WPRT) soared 20% today after its quarterly results and outlook topped Wall Street expectations.

So what: The stock has plunged over the past year on worries over the company's growth prospects, but today's first-quarter results -- earnings per share of $0.38 versus a year-ago loss of $0.57 on a revenue spike of 39% -- coupled with upbeat guidance are quickly easing some of those concerns. In fact, Westport's adjusted EBITDA loss for the quarter was only $1.6 million, compared to a loss of about $9 million in each of the past eight quarters, suggesting that its path to profitability looks pretty smooth from here.

Now what: Management now sees full-year revenue of between $175 million and $185 million, representing as much as 13% growth over 2013. "We are on track to achieve positive Adjusted EBITDA from operations by the end of 2014 by continuing to increase sales, shipping committed products, and applying cost and margin discipline," said CEO David Demers in the earnings press release. "At the same time, we are confident that our investment projects will deliver shareholder value as these products come to market." More important, with Westport shares still off about 55% from their 52-week highs and its balance sheet in solid shape, the downside seems limited enough to bet on that bullishness. 

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Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Westport Innovations. The Motley Fool owns shares of Westport Innovations. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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