Tecogen’s Solid Results in 2016 Lay Foundation For Even Stronger 2017

Tecogen Inc. (TGEN – $3.73) 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, as it has already shipped over 2,300 units, some of which have been operating for almost 25 years.

In the fourth quarter of 2016, product sales and service sales increased 144% and 32% respectively, which led to the highest quarterly revenue in Tecogen’s history. The strong increase in sales lead the Company toward profitability in the last 6 months of the year. The Company expects this growth cycle to continue into the current year.

The Company’s sales backlog of equipment and installations stands at $15.6 million, well above the Company’s stated goal of maintaining sales backlog above $10 million.

At ULTRATEK, everything is going as planned. The paper presented at the SAE World Congress described how the use of Tecogen’s Ultera emissions technology resulted in significant reductions of carbon monoxide (CO), nitrogen oxides (NOx), and non-methane organic gas (NMOG) emissions, with no measurable effect on fuel economy.

The development of Ultera for the propane-powered fork truck market is exciting, as it extends the technology into new platforms and verticals. Note that approximately 70,000 propane powered fork lift are sold annually in the United States alone.

The acquisition of American DG is nearing its final stage. Its existing customers will add a steady, predictable income to Tecogen’s bottom line. This should help grow the Company in many different ways.

The targets of the Company for 2017 and beyond are strong. Management continues to focus on delivering gross margins in the 35% to 40% range, maintaining the backlog and installation sales above $10 million, and delivering stable operating expenses of approximately $10 million on a yearly basis.

Based on the intrinsic value of Tecogen’s shares derived from our model, we reiterate our buy recommendation for Tecogen Inc. with a price target of $9.62, which is 157% above today’s stock price.

Download the fourth quarter 2016 Tecogen Inc. Company Report.

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