Are Shares of FuelCell Energy a Good Buy as We Head into 2021?

FuelCell Vitality, Inc. (FCEL) is an alternate power pioneer that designs, manufactures, installs, operates, and providers stationary gas cell energy vegetation for distributed energy era. The corporate presents a SureSource product line primarily based on carbonate gas cell expertise, together with distributed hydrogen, micro-grid, and multi-megawatt functions. The corporate primarily operates in america, South Korea, England, and Germany below 4 segments Product, Service and License, Technology, and Advance Applied sciences.

FCEL is without doubt one of the oldest baseload energy options suppliers steadily progressing in the direction of enabling a world empowered by clear power. In its third fiscal quarter ended July 2020, the income of $18.7 million declined 18% year-over-year, primarily reflecting a lower in Service and License revenues and Technology revenues. Working bills decreased 16% year-over-year to $7.6 million. Nevertheless, web loss for the quarter widened to $15.Three million from the year-ago lack of $5.Three million.

Regardless of enhancements within the science behind the choice power and emissions-free motion, the inventory misplaced 8.4% year-to-date. Furthermore, with uncertainty associated to the inventorys monetary well being and a number of other different components, FCEL has a Impartial score in our proprietary score system.

Right here is how our proprietary POWR Ratings system evaluates FCEL:

Commerce Grade: C

FCEL is at the moment buying and selling beneath its 50-day transferring common of $2.53 however above its 200-day transferring common of $2.21, indicating that the inventory is neither in an uptrend nor in a downtrend. Nevertheless, the inventorys 12.9% loss over the previous three months displays a short-term bearishness.

FCEL has not too long ago received an $8 million contract from the US Division of Vitalitys (DOE) Workplace of Vitality Effectivity and Renewable Vitality, in collaboration with the Workplace of Nuclear Vitality, to design and manufacture a SureSource electrolysis platform. The mission awarded to FCEL would be the first multi-stack electrolysis system produced with stable oxide expertise. The corporate additionally introduced multiple project awards to offer clear power to Northeast Energy Grid.

Nevertheless, the corporate continues burning cash, and one of many alarming metrics is a -70% return on fairness. It has efficiently raised $177.35 million in gross proceeds from multiple offerings of its frequent inventory between June 2020 and October 2020, giving it some room for respiration. The corporate intends to make the most of the proceeds to fund enterprise operations, together with growing tasks and increasing presence in South Korea. It has plans to faucet different Asian markets as nicely.

Purchase & Maintain Grade: C

By way of proximity to its 52-week excessive, which is a key issue that our Purchase & Maintain Grade takes into consideration, FCEL just isn’t positioned nicely. The inventory is at the moment buying and selling 34.3% beneath its 52-week excessive of $3.50.

Wanting on the previous three years, the inventory has misplaced greater than 91% as the corporate has not been capable of innovate and delivered actually little in its greater than 5 many years of operation. Consequently, FCELs top-line has additionally declined at a CAGR of 17% over the previous 5 years. In November 2019, FCEL expanded a partnership with Exxon Mobil (XOM) value $60 million for the event of carbon seize and separated the $200 million credit score facility as nicely, which turned out to be a big-time lifeline.

Furthermore, short-seller Night time Market Analysis additionally alleged earlier this month that the corporate did not disclose the lack of two of its largest generation-contract awards the LIPA 2 and LIPA 3. Nevertheless, FCEL emphatically denied these claims. Furthermore, the inventory not too long ago charged greater on heavy quantity, after a bullish name from JP Morgan (JPM) analyst Paul Coster who believes that the corporate is poised to pivot into profitability after years of funding.

Peer Grade: D

FCEL is at the moment rated #41 out of 58 shares within the Industrial Equipment trade. Different standard shares within the group are Parker-Hannifin Company (PH), Plug Energy, Inc. (PLUG), and Bloom Vitality Company (BE). All of those trade individuals have carried out higher than FCEL on a year-to-date foundation. PH, PLUG, and BE gained 10.7%, 415.2%, and 143.2%, respectively, over this era.

Trade Rank: B

FCEL is a part of the Industrial Tools trade, which is ranked #34 out of the 123 industries. The businesses on this trade supply precision components, merchandise, and techniques for functions serving varied prospects in end-markets. Demand is pushed by enterprise and industrial exercise, significantly in non-residential development. The profitability of particular person firms relies on the merchandising combine and price of financing rental stock.

Total POWR Score: C (Impartial)

Regardless of signing a number of tasks not too long ago, FCEL is rated Impartial on account of its deteriorating financials, short-and-long-term bearishness, and weak value momentum as decided by the 4 parts of our general POWR Score.

Backside Line

A gradual transition within the international power house is already taking place, with utility operators shifting towards clear power sources. FCEL as one of many international leaders within the gas cell expertise house additionally goals to make the most of its proprietary, state-of-the-art gas cell platforms utilizing clear assets. The corporate embraces a customer-focused and pushed tradition however is missing in international operations and modern tasks. It’s presently a speculative funding.

Analyst sentiment, which supplies a great sense of a inventorys future value motion, just isn’t spectacular for FCEL. The typical dealer score of two.33 signifies an unfavorable analyst sentiment. Of the three Wall Avenue Analysts that rated the inventory, 2 have given it a Hold rating.

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FCEL shares have been buying and selling at $2.15 per share on Wednesday afternoon, down $0.15 (-6.52%). 12 months-to-date, FCEL has declined -14.34%, versus a 8.02% rise within the benchmark S&P 500 index throughout the identical interval.

In regards to the Creator: Sidharath Gupta

Sidharaths ardour for the markets and his love of phrases guided him to changing into a monetary journalist. He began his career as an Equity Analyst, researching shares and making ready in-depth analysis reviews. Sidharath is at the moment pursuing the CFA program to deepen his data of monetary anlaysis and funding methods. More…

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