Small Cap Insight
After disappointing revenue guidance for the remaining of 2013, Westport Innovations (WPRT)
slumped 11% to start August. This placed the stock back at a level
originally reached in late 2011 on the back of the hype of natural gas
as a transportation fuel for the trucking industry. With low domestic
natural gas prices and plenty of supplies, the maker of engines that use
natural gas stands at the intersection of huge potential and dwindling
The confusing part about the Westport situation is
that the vast majority of the promising future of the company is tied up
in two major joint ventures (JVs). These businesses are booming with
promising developments, yet the ownership percentage prevents the
loading of the revenue into the financials. The rareness of this
situation appeared to even have the analysts confused on the earnings call. The typical question focused on the honestly unimportant revenue of the 100% owned business units.
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