Akeena (Nasdaq:AKNS) Reports - We Remain Skeptical About Stock in Near Term
Apr 29, 2009
Author: SCP Editor
April 29, 2009 – Akeena (Nasdaq:AKNS) reported Q1 earnings this morning which were pretty dismal and reflected challenging conditions that the entire solar industry had to deal with in Q1. To put it in perspective, the EIA released January net generation data yesterday, showing that solar net generation in January 2009 was 5 thousand MWh compared with 15 thousand MWh net generation for the same month last year. So the overall industry has difficult, not just conditions for Akeena. That being said, we have been highly critical Akeena and its stock price in the past and remain so.
The results:
Akeena (Nasdaq:AKNS) reported a 37% Y/Y decline in Q1 revenue to $7.6 million, gross margins of 29.7% and a net loss of $5.1 million, or $0.17 per share. Commercial sales were $915 thousand and residential sales were $6.7 million. The company installed about 945kW for the quarter compared to 1,587kW in the same quarter last year. Cash and equivalents at March 31, 2009 were $2.9 million, and the company’s backlog was about $4.8 million. Management didn’t provide guidance, but noted that the quarterly EBITDA breakeven is about $15 million.
At yesterday’s closing price of $1.10 we think the stock is still significantly overvalued in the current environment. The bright spot in this morning’s release is that it looks like the company has been able to move gross margins back upstream. But still, the company is going to need to raise money. It had $2.9 million at the end of the quarter and its operating expenses for the quarter were $5.7 million. Expect more dilution in the near term, and this will be a downward pressure on the stock. Even setting this expectation aside, the stock is trading at about .89x trailing 12-month revenues, but from the looks of things, revenues in the current year will be down from FY08, so adjusting for lower revenues against the current multiples also points to a lower trading range for the stock.
Last June we recommended a short on the stock when it was trading at $6. We took profit on the stock at $4, which turned out to be a move that left significant gains on the table. At $1.10, all things being equal, it is just difficult to see any value in the stock, or near-term upside until it gets more clear how the business is going to deal with its cash requirements.
IMPORTANT DISCLAIMER: This is not an offer to buy or sell securities in any jurisdiction. This article is for informational purposes only. We do not give legal or accounting advice of any kind. We are not a licensed broker and do not clam to be. We make no representations to the suitability of any transaction at any time. The author of this article has no position in AKNS.
