Expanding Markets, Sales, and Margins at EuroSite Power
2015 established EuroSite Power (EUSP – $0.76) as a leading on-site utility solutions provider. The Company saw a solid rise in revenues (+39%) and energy production (+59%) compared with 2014, while delivering improvement in all Key Performance Indicators.
The four “pillars of growth” that the Company introduced last year are starting to bear fruit. In the fourth quarter of 2015, EuroSite’s adjusted gross margins reached 31.5%, versus 18.6% in Q4 of 2014. Moreover, the Company is adding new on-site utility agreements that it probably wouldn’t have been able to close before due to lack of available capital.
EuroSite is also expected to close its first on-site utility agreements outside the United Kingdom in 2016 with the help of the well-known equipment manufacturer TEDOM, which has a large dealer network across Europe.
Moreover, the new gas supply arrangement with Corona Energy is a win-win for both EuroSite Power and its customers. It allows the Company to substantially reduce the price paid for gas consumed by its installed machinery and allows customers to purchase gas at a discount for their other applications.
In 2016, EuroSite Power is likely to take full advantage of all these growth opportunities. It can meet the needs of many more potential customers and its margins are trending upwards. A very attractive combination.
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$2.67, which is 251% above today’s stock price.
|Download the fourth quarter 2015 EuroSite Power Company Report.|
|Smallcaps.us Advice: Buy||Price Target: $2.75||Latest Company Report (pdf)|
|For important disclosures, please read our disclaimer.|