Westport Innovations (WPRT, Financial) delivered more than 50,000 engines last year from its Weichai Westport joint venture, which is quite encouraging and hints towards improving prospects. Currently, it does not have any trailing or forward P/E because of its year-over-year losses. However, the developments it is making are quite impressive, which could propel its growth in the years to come.
Looking beyond the short-term weakness
These developments look quite encouraging, but the company is facing various near term headwinds, which cannot be neglected. The volatility in the crude and currency market is putting a lot of pressure on the industry. The management said,
“Westport's positioned with industry-leading technology and experience, but 2015 is going to be a challenge for our ATG and On-Road Systems units.”
Therefore considering its present situation the company focused to reduce cost while improving margins.
Further in this direction, Westport completed the acquisition of Netherlands-based Prins Autogassystemen for $15.1 million. Prins has a respectable line of products in the global market, which, coupled with its strong relationship with OEM’s, will be a strong driver for Westport in the days ahead. Also, it will help to expand its markets into Africa, Korea, Turkey and Central Europe.
Although the numbers are quite disappointing yet there are some important takeaways that point to improving fundamentals. For example, Westport hit the $1 billion total segment revenue milestone for the first time in 2014. Additionally, the company also reported strong growth in its joint ventures and core applications such as transit, refuse trucks, and urban trucking.
Conclusion
If we look at the historical charts, its shares seem to have a strong resistance at the $3.3 level, which it touched in the beginning of this year. And since then it has risen around 52%, which is quite encouraging. But considering the recent underperformance in its fourth quarter result we will have to rethink our stance and look for fundamentals that will propel its growth in the long run.
