Tecogen Set To Go Full Steam Ahead in 2019

Tecogen Inc. (NASDAQ: TGEN – $3.71 & Fra: 2T1 – €3.16) designs, manufactures and sells industrial and commercial CHP (Combined Heat & Power), or cogeneration, systems that produce combinations of electricity, hot water, and air conditioning. It’s a well-established Company that has already shipped over 3,000 units, some of which have been operating for more than 35 years.

Tecogen announced third quarter revenues of $7,938,684 compared with revenues of $8,501,198 for the same period in 2017. Although this represents a decline of 6.6% it’s noteworthy to mention that last year’s third quarter revenue was an all-time high for the Company.

Despite the small revenue decline, as of the end of Q3 2018, on a trailing four quarters basis, revenue growth was 23% reaching a total revenue level of $37 million compared to $30 million for the same trailing four quarters period a year ago.

Backlog of products and installations was $15.7 million as of the end of the third quarter of 2018 and stood at $20.2 million as of November 9, 2018. The solid and rising backlog is driven by strong traction in both the InVerde and TecoChill product lines, as well as installation services.

The legalization of cannabis in several US states has led to a boom in greenhouse growing centers for the cultivation of cannabis plants. However, a fully controlled environment is necessary to create the optimum growing conditions within the greenhouses. Since the TecoChill line delivers air conditioning and humidity control, operators gain the capability to manage the indoor climate of their facility. This has led to several breakthrough sales for Tecogen in the sector.

In addition, by reintroducing the TecoFrost product, Tecogen will be able to penetrate the industrial cooling market. High electric costs make natural gas systems far more cost effective and ultimately cleaner from an air quality standpoint.

The Company aims to return to profitability next quarter. It will do so by continuing to grow product sales, particularly in the chillers segment, managing its turnkey construction projects better to improve margins, and controlling expenses.

We reiterate our buy recommendation for Tecogen Inc. with a target price of $9.41, which is 153% above today’s stock price.

Download the third quarter 2018 Tecogen Inc. Company Report.

Smallcaps.us Advice: BuyPrice Target: $9.41Latest Company Report (pdf)
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