Perhaps one of the most interesting opportunities on the OTC right now comes as the consequence of a sharp drop in shares of Real Goods Solar, Inc. (OTCMKTS:RGSE). The remarkable part of this story is that the drop in recent days has come from news of the company beginning to consider “strategic options”. Those who have been hanging out in this stock have been betting that the company would manage to make good on its concept of efficient home design relative to solar energy.
However, this set of more definite and unmistakable objectives has not yet been solidified into place, leaving more speculative headlines to rule the day. As such, the company has left itself open to strategic action, recently announcing that its Board of Directors, supported by its management team, has commenced a process to explore strategic alternatives focusing on maximizing shareholder value. According to the release, “Strategic alternatives to consider may include, among others, a sale of RGS Energy, a business combination such as a merger with another party, or a strategic investment financing which would allow the Company to continue its current business plan of commercializing POWERHOUSE solar shingles.”
Real Goods Solar, Inc. (OTCMKTS:RGSE) promulgates itself as a company that operates as a residential and small business commercial solar energy engineering, procurement, and construction company in the United States.
The company’s Residential segment installs solar energy systems for homeowners, including lease financing, as well as small business commercial services in the continental United States.
Its Sunetric segment installs solar energy systems for homeowners and business owners in Hawaii. The company’s POWERHOUSE segment manufactures and sells solar shingles. The company Real Goods Solar, Inc. offers solar energy services, including design, procurement, permitting, build-out, grid connection, financing referrals, and warranty.
The company markets its products and services through an outside sales team, inside sales, e-sales, and customer referral programs, as well as an online direct marketing channel. Real Goods Solar, Inc. was founded in 1978 and is headquartered in Denver, Colorado.
According to company materials, “RGS Energy (OTCQX: RGSE) is America’s Original Solar Company providing solar, storage and energy services whose mission is clean energy savings. The company is the exclusive worldwide manufacturer of the visually stunning POWERHOUSE Solar Shingle System. RGS Energy also sells, designs and installs solar systems for residential homeowners, commercial businesses, non-profit organizations and government entities. For more information, visit RGSEnergy.com and RGSPOWERHOUSE.com, on Facebook at www.facebook.com/RGSEnergy and on Twitter at twitter.com/rgsenergy. Information on such websites and the websites referred to above in this press release is not incorporated by reference into this press release. RGS Energy is the company’s registered trade name. RGS Energy files periodic and other reports with the SEC under its official name Real Goods Solar, Inc.”
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As noted above, RGSE just announced that its Board of Directors, supported by its management team, has commenced a process to explore strategic alternatives focusing on maximizing shareholder value.
That announcement has been met with selling. In all, shares of the stock are now down a total of about -29% over the past five days of trading. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -40%. Furthermore, the listing has seen a growing influx of trading interest, with the stock’s recent average trading volume running 9% over what the stock has registered over the longer term.
“Over the past year, we made significant strides reinventing RGS Energy around the POWERHOUSE™ solar shingle that we believe will enable us to enjoy future growth and profitability,” said Dennis Lacey, RGS Energy’s CEO.
“Acknowledging our previously stated view that it will require time, years in fact, to grow the POWERHOUSE brand and revenue streams, to ensure we are best positioned to address this opportunity with increased television advertising, services, access to customer bases, access to capital and the like, we believe now is an opportune time to consider whether pursuing complementary paths may enhance shareholder value.”
Earning a current market cap value of $27.23M, RGSE has a significant war chest ($8.6M) of cash on the books, which compares with about $8M in total current liabilities. One should also note that debt has been growing over recent quarters. RGSE is pulling in trailing 12-month revenues of $14.8M. However, the company is seeing declines on the top-line on a quarterly y/y basis, with revenues falling at -3.3%. As more color becomes clear on the name, we will review the situation and update our take. Sign-up for continuing coverage on shares of $RGSE stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $RGSE, either long or short, and we have not been compensated for this article.