Pioneer Power Solutions (PPSI) Soars on Updated Full-Year Forecast

Before the market open today, Pioneer Power Solutions Inc (NASDAQ:PPSI) released preliminary financial results for its fiscal full-year. The news jumpstarted the company’s stock, which is currently up $1.05 to $6.80 – an 18 percent jump. The company’s share price is up 107 percent this year-to-date, but – not including today’s rally – its stock has been relatively flat in the last six months.

The thinly-traded nano-cap stock is also spiking on volume today, at least compared to its usual activity. Nearly 70,000 shares of the company have been exchanged since this morning, up from the stock’s average daily volume of about 9,300 shares.

The company, which develops and manufactures video display technology, told shareholders that for fiscal 2017 it expects its net revenues will be in the range of $120.0 million to $127.0 million. Wall Street analysts, on average, are expecting revenue to be about $124.8 million.

Pioneer said that it expects its earnings to be between 83 cents and 91 cents per share, significantly higher than the consensus estimate – which is calling for net income of just 54 cents per share.

“This outlook represents continued margin expansion and further improvement in profitability, as we continue to benefit from the operational improvements we have made and continue to make.” said Nathan Mazurek, Chairman and Chief Executive Officer of Pioneer Power Solutions. “We remain focused on higher margin opportunities, resulting in targeted growth.”

Mr. Mazurek told investors that the company is continuing to see strong demand for its technology, as demonstrated by its backlog of $39.6 million – as of December 31, 2016. At the same moment in 2015, Pioneer’s backlog was at $28.7 million.

The CEO also said that, specifically, the company is growing its presence in the areas of microgrids, on-site generation solutions, distribution generation and data center services.

“The continued bottom-line improvements are due to our ability to extract operational leverage from our business, and we are confident we can further expand profitability and cash generation as we scale the business,” Mazurek added.

On December 31, 2016, North Star Investment Management Corporation announced – through a Schedule 13G filing with the United States Securities and Exchange Commission (SEC) – that it holds a 5.4 percent stake in Pioneer. Specifically, the firm owns 466,880 shares of the company’s common stock.

Last month, it was announced that the company had received $1.8 million in new orders for its Dry-Type Transformers. The new sales wins included over $800,000 in equipment that supports energy storage device production capacity adjacent to the biggest electric vehicle manufacturing facility on earth, about $500,000 in transformers for a global tech company, and another $500,000 in transformers that will be delivered to a power plant in Ohio.

The author has no positions in the above mentioned companies.

Tim is a contributing analyst for and specializes in equities trading and public offerings. He is a graduate of UCLA and began his career doing capital markets research for a top investment banking software provider.