Please ensure Javascript is enabled for purposes of website accessibility

Westport Fuel Systems Still Faces Uphill Battle Even After Weichai Agreement Sends Shares 21% Higher

By Daniel Miller - Aug 29, 2018 at 2:21PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Today's 21% stock price pop was welcomed by investors, but the company still faces growth questions over the long haul.

What happened

Shares of Westport Fuel Systems Inc. (WPRT 0.00%), a manufacturer and supplier of advanced clean fuel systems and components, are jumping 21% as of 11:40 a.m. EDT Wednesday after announcing a deal with China's Weichai.

So what

Wesport Fuel Systems entered into a definitive agreement with Weichai Westport to develop and market a heavy-duty natural gasoline engine using Westport HPDI 2.0 technology. The technology will be based on one of Weichai Power's engine platforms -- Weichai Westport and Weichai Power are affiliates of Weichai Holding Group. The new engine will be designed to meet China VI emissions standards and is scheduled for launch during the second half of 2019.

A gas and oil transportation truck in front of a plant.

Image source: Getty Images.

"It really is a continuation of the successful relationship between Weichai and Westport Fuel Systems. These agreements demonstrate the viability of our market-ready, clean technology solutions; secure the value of our Westport HPDI technology; and provide protection to our intellectual property," said Nancy Gougarty, Chief Executive Officer of Westport Fuel Systems, in a press release.

Now what

Ideally, this partnership will deliver a commercially available natural gas engine solution that can take advantage of China's liquefied natural gas fueling infrastructure, as well as help solve the region's pollution problems, and become a leading powertrain option for heavy-duty long-haul trucks.

WPRT Chart

WPRT data by YCharts

Despite today's pop, investors have to keep in mind the stock is still down roughly 8% year to date and has shed a vast majority of its value over the past decade. Further, investors have rightfully questioned its long-term growth strategy as management focuses on cutting costs, reducing operating expenses, and selling assets such as its compressor business for $14.8 million. Taking a step forward in China with this agreement is a positive development, but Westport has a lot of work to do convincing investors it can grow into a long-term winner.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Westport Fuel Systems Inc. Stock Quote
Westport Fuel Systems Inc.
WPRT
$1.17 (0.00%) $0.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
356%
 
S&P 500 Returns
124%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.