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Tuesday, June 28, 2022

Why Ballard Power, Plug Power, Bloom Energy, and Especially FuelCell Energy Stocks Popped Today

What happened

Last week was an important week for the hydrogen fuel cell industry, with Ballard Power Systems (NASDAQ:BLDP), Bloom Energy (NYSE:BE), and Plug Power (NASDAQ:PLUG) reporting earnings. FuelCell Energy (NASDAQ:FCEL) was the odd man out. It reports earnings only next month — but even FuelCell Energy had some news to report today.  

On Friday, investors rendered their verdict on the week, and it was generally positive, with every fuel cell stock but Plug closing the day higher — and today looks even better.

Here’s how the fuel cell stocks are faring as of 11:35 a.m. EDT Monday.

  • Ballard Power is up 4.9%.
  • Bloom Energy is up 5.5%.
  • Plug Power is up a remarkable 8.5%.
  • FuelCell Energy is doing best of all, up 11%.

Image source: Getty Images.

So what

After gaining only 2.2% Friday, FuelCell is rocketing this morning on news that it has secured $15 million in financing from East West Bank to fund its production of a 7.4 megawatt fuel cell project for the U.S. Navy Submarine Base in Groton, Connecticut. It believes it can secure debt financing to complete the project later this year. Commercial operation of the project could begin as early as next month, and FuelCell calls this a “milestone” project for the company — one that will secure a 20-year-long revenue stream as FuelCell provides electricity from the project to the Naval base.  

Now what

Now let’s quickly review the news for the other three fuel cell firms — the ones that reported earnings last week, and see why they are performing so well, as well.

According to published analyst estimates collated by TheFly.com, all three fuel cell firms (aside from FuelCell) missed earnings last week, with Bloom reporting a $0.23 per share loss on Wednesday, followed by Plug losing $0.18 per share on Thursday, and finally Ballard losing $0.07 per share on Friday.

That doesn’t sound so great, but on the bright side, Ballard and Plug, at least, reported better-than-expected revenue for their respective fiscal second quarters. And Bloom gave new guidance for the balance of fiscal 2021 which — taken at the midpoint — sees revenue coming in at about $975 million, or slightly ahead of expectations.

It’s this revenue growth investors seem to be focusing on today, on the assumption that at some point in the future, this revenue will turn into profits. Based on last week’s abysmal profit performance, however, and based on the industry’s history — specifically, the fact that according to S&P Global Market Intelligence, out of these four companies, only Ballard has ever earned a single full-year profit in the past 20 years — I’m not sure I share investors’ optimism about these stocks.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.


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