Can the Delphi Automotive Deal Turn Westport Around?

New agreement makes it easier for Westport target OEMs.

| More on:
The Motley Fool

Westport Innovations Inc.(TSX:WPT)(NASDAQ:WPRT) a producer of natural gas engines and vehicles has just announced a new partnership with Delphi Automotive PLC (NYSE:DLPH).

Under the agreement the two companies will be joining forces to co-develop and manufacture high-pressure natural gas fuel injectors. These injectors are designed for heavy duty vehicles looking to use Westport’s high pressure direct injection (HPDI 2.0) fuel systems.

The companies will be combining engineering capabilities and production capacities to create these products on multiple platforms for several OEMs. Delphi is already a major player in the OEM market. It operates major technical centers, manufacturing sites and customer support services in 32 countries, giving Westport manufacturing and inventory capabilities across the world. This boost in production is a key factor for the company, especially given its recent agreement with auto manufacturer Tata to develop OEM Westport engines for the Indian market.

The terms

Under the agreement Westport will contribute to investing in critical equipment (manufacturing, assembly, etc.) in Delphi’s production centers. The cost associated has not been released but the company claims that the funds required were earmarked in Westport’s September 2013 prospectus.

In return Delphi will work with Westport to optimize all aspects of the injectors. Intellectual property rights will be jointly owned by both companies and maintained by Westport. Both companies are expecting production to reach 100,000 injectors a year within the next four years.

Foolish bottom line

An agreement like this could be just the thing to help Westport break out of its stock slump. The company hit a new 52-week low on Monday, dropping down to $16.90, the first time since March 2011 that the stock has sunk this low. This is a far cry from the 52-week high Westport saw in July of $36.57.

Another year of losses — which totaled $185.5 million in 2013 and $98.8 million in 2012 — has taken its toll on the company. A good portion of these losses have apparently come from R&D and production of Westport’s next generation of engines. Now that the engines are ready for market and agreements such as this one and the one with Tata are rolling in, it might finally be time for the company to reap the rewards of years of capital and intellectual investments.

Fool contributor Cameron Conway does not own any shares in the companies mentioned. The Motley Fool owns shares of Westport Innovations.

More on Investing

Dividend Stocks

Suncor Energy: Buy Now or Wait?

Suncor just hit a multi-year high. Are more gains on the way?

Read more »

Colored pins on calendar showing a month
Dividend Stocks

A 6% Dividend Stock Paying Out Every Month

Monthly dividends can calm a jumpy TFSA because you get cash flow regularly, even when unit prices wobble.

Read more »

visualization of a digital brain
Tech Stocks

2 Top Canadian AI Stocks to Buy in January

Canadian AI stocks such as Docebo and Kinaxis offer significant upside potential to shareholders in January 2026.

Read more »

ways to boost income
Dividend Stocks

Got $2,000? 4 Dividend Stocks to Buy and Hold Forever

These dividend stocks are backed by resilient business models and well-positioned to pay and increase their dividends year after year.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Monday, January 12

The TSX closed at a fresh record high with a strong weekly gain, and today’s session could be shaped by…

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

Invest $10,000 in This Dividend Stock for $697 in Passive Income

This top passive-income stock in Canada highlights how disciplined cash flows can translate into real income from a $10,000 investment.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Retirement

CRA: Here’s the TFSA Contribution for 2026, and Why January Is the Best Time to Use it

January 2026 gives you fresh TFSA room, and Brookfield can be a straightforward “core compounder” idea if you’re willing to…

Read more »

woman checks off all the boxes
Dividend Stocks

This Stock Could Be the Best Investment of the Decade

This stock could easily be the best investment of the decade with its combination of high yield, high growth potential,…

Read more »