Why Ballard Power Systems Inc.'s Shares Popped 12% Today

What happened

Shares of Ballard Power Systems Inc (NASDAQ: BLDP) jumped as much as 11.9% in trading Tuesday after the company announced the sale of some noncore assets. At 12:40 p.m. EDT, shares were still up 9.1% on the day.

Continue Reading Below

So what

Ballard Power Systems subsidiary Protonex is selling "certain non-core assets" related to the Power Manager business for $16.0 million in cash to Revision Military Ltd. Assets related to unmanned vehicles will remain with Ballard Power Systems. Of the cash, $4.75 million will be paid immediately and the other $11.25 million will be paid based on sales objectives over the next 12 months.

The move is part of Ballard's strategy of optimizing the portfolio to align with fuel cells long term. The added cash isn't bad news for the company, either.

Now what

This is a marginal impact for Ballard Power Systems long term and ultimately get the company out of the power-management business. Protonex was acquired in 2015 for $17.5 million, so this will ultimately be a loss for the company on the balance sheet, but that doesn't mean it isn't the right move. Investors are cheering the fact that Ballard was able to nearly break even on the investment now that it's shifting gears to focus on fuel cells, where it sees long-term value.

Advertisement

10 stocks we like better than Ballard Power SystemsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Ballard Power Systems wasn't one of them! That's right — they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 6, 2018

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Source: Read Full Article