Maxwell Continues To Sorely Test Investor Patience Ahead Of Commercial Ramps

It has been clear for a while that 2018 wasn’t going to be a great year for Maxwell Technologies (MXWL), but bulls could take some solace in the idea that 2019 would see the start of meaningful ramps in long-awaited opportunities like auto ultracapacitors. While that is still a valid bull thesis in my view, the reality is that 2018 has been tougher than expected, including a higher cash burn that forced the company to move faster with a dilutive financing.

I’m frankly torn on these shares. I do genuinely believe that the company is going to see meaningful auto revenue starting in 2019 from platform wins in active suspension and ADAS backup systems and grow from there, and I do also believe in the potential in areas like rail. On the other hand, this is not a company whose execution track record leads me to want to lend any of whatever credibility I have to them. Accordingly, while I do think these shares are undervalued on the potential of the launches in 2019 and beyond, this is a consummate “caveat emptor” stock and one where you really need to do your own careful due diligence.

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Maxwell Continues To Sorely Test Investor Patience Ahead Of Commercial Ramps

Maxwell Scores Another Auto Win As High Voltage Lags

Maxwell Technologies (MXWL) has long been a frustrating stock for growth investors, as the company's ultracapacitor products have a lot of promise in a wide range of growth markets but the execution on commercialization has been painfully slow. Although the company's first quarter results aren't going to quiet the bears who argue this is a perpetual "wait until next year" story, I believe the partnership/design win with Geely (OTCPK:GELYF) is a big deal, and I believe the company can still benefit from a utility transmission and distribution expansion cycle.

Valuation is never simple with a company on the cusp of potentially significant but very uncertain commercial adoption curves. While I believe $6 to $7 is a fair range now, investors should expect above-average risk and volatility, given that so much of the value lies beyond the next few years.

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Maxwell Scores Another Auto Win As High Voltage Lags

Maxwell Shareholders Could Finally See Some Rewards For Their Patience

Maxwell Technologies (MXWL) hasn't been the easiest stock to hold over the last few years, as the promise of the company's ultracapacitor and dry battery electrode technology has been offset by significant revenue volatility and numerous false starts in what were supposed to be exciting growth markets. With all of that, the shares have lost about 20% of their value over the last three years and have spent most of the last year between $5.50 and $6 (with excursions down to $4.50 and up to $6.50 along the way).

Maxwell remains a tough stock to value, as there is little more to go on than a handful of design wins and potential end-market developments. That said, I think the company deserves more credit than it gets for "keeping the lights on" and using opportunities like the Chinese hybrid bus market to fund R&D and product development in areas like auto electrification, renewables, mass transit, and grid management that could start to pay off in the next couple of years.

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Maxwell Shareholders Could Finally See Some Rewards For Their Patience

Maxwell Still Stuck In A Turbulent Transition

It's been practically a boilerplate warning in my prior articles on Maxwell (NASDAQ:MXWL) that this energy tech company's stock is likely to be very volatile as the company tries to cross the bridge between the Chinese hybrid bus and wind businesses that got it this far and the company's real future in applications like passenger autos, trucks, and perhaps rail and grid-scale utility markets.

With that, I'm not altogether surprised that there was a big downward revision after the last quarter and that the shares are down about 20% from the time of my last write-up.

Maxwell has frustrated a lot of investors for quite a while now, but I think there is one aspect to this story that isn't often discussed. While many energy tech companies have gone out of business because they couldn't continue to fund their large R&D needs while commercial partners tried out their technology, Maxwell has been able to use its China business to partially subsidize this extended R&D/field trial process.

Although success for Maxwell is by no means assured, companies like Continental (OTCPK:CTTAY), Valeo (OTCPK:VLEEY), and Volkswagen (OTCPK:VLKAY) are pushing on with increased electrification of passenger cars and that does represent at least a potential long-term opportunity for this electricity storage/delivery specialist.

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Maxwell Still Stuck In A Turbulent Transition

Seeking Alpha: Maxwell's Road Still Bumpy, But Seems To Be Leading Somewhere

Maxwell (NASDAQ:MXWL) continues to be an exasperating story. On one hand, it's one of the only real ultracapacitor companies out there (let alone one of the only investable ones) and the company has scored wins with legitimate companies like Continental AG (OTCPK:CTTAY) and PACCAR (NASDAQ:PCAR). On the other hand, the company's excessive reliance on the heavily-subsidized Chinese bus and wind power markets has created a lot of volatility and left it exposed to intense price competition.

There is a very real chance that Maxwell could log three straight years of revenue contraction before seeing growth again in 2017, and that's hardly consistent with a traditional growth story. On the other hand, truck and passenger car manufacturers do seem to be increasingly interested in Maxwell's ultracapacitor technology and these two markets could drive meaningful future growth. A potentially sharp downturn in the Chinese bus opportunity over the next couple of years leads me to cut my fair value slightly and I'm not sure there's enough upside today to be worth the risk, but management's efforts to simultaneously sign up new OEM customers and improve margins could start paying off significantly in a couple of years.

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Maxwell's Road Still Bumpy, But Seems To Be Leading Somewhere

Seeking Alpha: For Ever-Volatile Maxwell, New Markets Must Start Placing Orders

Maxwell Technologies (NASDAQ:MXWL) shares have always been volatile, but the direction of that volatility has been decidedly negative over the last year. Investors have grown increasingly frustrated over the erratic performance of the company's Chinese hybrid bus market and the lack of significant orders or momentum in supposed-to-be-big markets like autos, trucks, and trains.

As speculations go, this could be an interesting stock for aggressive investors to consider. The company now counts PACCAR (NASDAQ:PCAR) as an OEM heavy duty truck customer and management has been guiding to greater auto adoption in the 2016 model year. Admittedly there is still frustratingly little substance for these shares to trade on, but that's the nature of emerging/speculative tech and the long-term rewards could still prove meaningful.

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For Ever-Volatile Maxwell, New Markets Must Start Placing Orders

Seeking Alpha: Maxwell Down On Power, But Still Promising

Six months ago, I thought that the hoopla over Maxwell Technologies' (NASDAQ:MXWL) prospects of securing an ultracapacitor order from Tesla (NASDAQ:TSLA) (in addition to or along with other auto OEM orders) had taken the shares a little too far for my comfort, and that it was better to wait for a pullback. The shares proceeded to climb another 25% from that point, but have been cut down by more than half on a guidance reset following second-quarter numbers and the perception that management has backed away from its guidance for multiple automotive design wins in 2014.

All in all, while the this sharp decline from the late May highs has to be painful for Maxwell shareholders, the story has really changed all that much. The company's ultracapacitors continue to look like an interesting solution for a variety of applications in transport and energy, while the company's manufacturing approach should support attractive margins. Order timing is a major unknown, and these shares are vulnerable to the vagaries of the market's appetite for risky stories, but this seems like a good time for risk-tolerant investors to take a closer look.

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Maxwell Down On Power, But Still Promising

Seeking Alpha: Is It Too Late To Jump Into Maxwell Technologies?

About six months ago, I thought Maxwell Technologies (MXWL) looked pretty interesting, as Wall Street seemed to be incorporating pretty reasonable expectations for a company that could become a high-growth story stock. I should have followed my own advice, as although the stock drifted down through mid-December, the shares have since rocketed up on rumors of a potential partnership with electric car pioneer, Tesla Motors (TSLA).

Maxwell still has a lot to prove, not only in terms of driving OEM acceptance of its ultracapacitors, but also in terms of being able to generate meaningful margins and cash flows as the business scales up. With the stock up 50% from late September, it almost goes without saying that it is not as cheap as it was and that the expectations that go into supporting today's valuation are not as conservative.

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Is It Too Late To Jump Into Maxwell Technologies?

Seeking Alpha: The Hurry-Up-And-Wait Continues At Maxwell

Many years spent in the market has taught me to be on guard whenever investors try to promote a story on the basis of technology that they call "disruptive", "world/game-changing" and so on. A quick look at the chart of Maxwell Technologies (MXWL) can show why - however game-changing ultracapacitor technology may prove to be, these are still very early days for the technology and the stock has chopped back and forth between $5 and $20 for almost 15 years after previously enjoying a roughly three-year run between $20 and $40.

There are plenty of criticisms you can level at Maxwell. The company has failed to keep its nose clean, with a DOJ deferred prosecution agreement over a bribery scandal and a more recent accounting scandal tied to revenue recognition practices. It's also true that the company has struggled to secure meaningful commercial adoption outside of China's wind power and hybrid bus markets.

And yet, the company has lifted itself to positive free cash flow, has managed to generate positive operating income, and sports an accumulated deficit of $155 million. What's more, the company has convinced leading manufacturers like Continental AG and Caterpillar (CAT) to at least give their technology a try. By no means do I believe the odds favor Maxwell, but unlike many energy tech names, Maxwell's valuation seems to at least factor in achievable expectations.

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The Hurry-Up-And-Wait Continues At Maxwell

Investopedia: Washed Out Expectations May Help Maxwell From Here

The combination of overheated expectations and market weakness in Europe and Asia has done a real number on energy technology names ranging from wind power to solar to batteries. With declining revenue momentum in ultracapacitors, lower overall revenue guidance and worries about both emerging competition and sluggish end markets, Maxwell Technologies (Nasdaq:MXWL) has been no exception - dropping almost 50% over the last year.

I'm starting to wonder, though, if this isn't a good time to start reconsidering this name. I think investors have been forced towards much more rational market and revenue expectations, and if anything the market may now be undervaluing the company's long-term potential. While this remains a high-risk name with much to prove, sometimes emerging tech stories work better after a lot of the wide-eyed optimism has been washed out of the stock.

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Investopedia: Maxwell Offers Energy Tech With A Real Model

Energy tech is a perennially exciting market, even as the attention shifts from year to year among fuel cells, solar panels, wind power, batteries and so on. What makes Maxwell Technologies (Nasdaq:MXWL) unusual, though, is that it's a company with real revenue, real products and actually just a bit of profitability. While there is still very much a "build it and they will come" aspect to the company's targeted markets, Maxwell looks like a better play on the future of power alternatives.

Rare Profitability
A lot of energy tech has been divvied up between unprofitable speculative companies with little more than patents and prototypes and giant industrial/technology concerns. That makes Maxwell's profitability rather uncommon.

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http://stocks.investopedia.com/stock-analysis/2012/Maxwell-Offers-Energy-Tech-With-A-Real-Model-MXWL-JCI-PC-ZOLT0315.aspx