EuroSite Power Ready for Strong Growth Across Europe

EuroSite Power (EUSP – $0.43) installs, owns, and operates Combined Heat & Power (CHP), and cooling systems at smaller industrial and commercial facilities. It provides these facilities with clean, reliable power, cooling, heat and hot water without any capital or start-up costs to the customer and at lower costs than charged by conventional energy suppliers.

In the third quarter, ended September 30, 2016, EuroSite Power recorded revenues of $459,114, an increase of 9%. In local currency however – the Company’s operation is located in the United Kingdom – revenues grew by an impressive 28.4%.

Revenues especially benefitted from a higher number of operating units and the improved utilization rate of the CHP machines. Moreover, gross margin excluding depreciation reached 32.8%, the highest third quarter gross margin in the Company’s history!

The Company is working hard to secure more and bigger projects. Customers with multiple sites, like the National Health Service (NHS) and private health care operators, have been targeted in particular. Also, in mainland Europe several projects have been identified that could result in contract wins in the coming months.

In addition, EuroSite Power has identified its initial acquisition targets. We have the impression from management’s comments on the quarterly earnings call that an acquisition could be closed fairly soon.

With only about $300,000 in convertible debt and more than $4.5 million cash in the bank, EuroSite Power is positioned to aggressively grow its business across Europe.

Based on the intrinsic value of EuroSite Power’s shares derived from our model, we reiterate our buy recommendation for the Company with a price target of US$2.75, which is 643% above today’s stock price.

Download the third quarter 2016 EuroSite Power Company Report.

Smallcaps.us Advice: Buy	Price Target: $2.75	Latest Company Report (pdf)
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