Why Westport Fuel Systems Inc.'s Shares Popped 15% Today

MarketsMotley Fool

What happened 

Shares of natural gas technology company Westport Fuel Systems Inc. (NASDAQ: WPRT) jumped as much as 15.2% in trading Tuesday, after the company posted second-quarter earnings. A year after it merged with Fuel Systems Solutions, revenue is surging, margin is up, and the company is nearly back to profitability. Investors are liking what they see, and as of 3:55 p.m. EDT, shares were still up 12.7% on the day.

Continue Reading Below

So what

Revenue jumped 67% to $62.1 million, gross margin increased 350 basis points to 25.4%, and net loss from continuing operations was $13.3 million, an improvement from a $39.5 million adjusted net loss a year ago. Management touted non-core asset sales that have generated over $100 million in cash and the reduction of $30 million in run-rate costs a year ahead of schedule as reasons for the major financial improvement.

On a per-share basis, the loss was $0.12, which easily topped the $0.15 loss analysts were expecting.

Now what

Westport isn't yet profitable, but the rapid improvements in margin and operating costs shows strong momentum in the company's execution. Ending the quarter with $87.7 million in cash will also give the business some flexibility. Investors should watch adoption of the High Pressure Direct Injection 2.0 system later this year and whether it gives a boost to sales. For now, it looks as of Westport Fuel Systems is on the road to recovery.

10 stocks we like better than Westport Fuel Systems Inc.When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Westport Fuel Systems Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 1, 2017

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.