FuelCell Stock Is Best Avoided Despite Recent Correction


FuelCell Energy stock (NASDAQ:FCEL), a company that designs, manufactures, and operates fuel cell power plants that work on natural gas or biogas, has declined by almost 26% over the last month, considerably underperforming the S&P 500 which remains up by about 2% over the same period. While Hydrogen stocks at large have underperformed recently due to the stalling of President Biden’s Build Back Better plan, which had proposed to provide tax credits for hydrogen production, FuelCell also published disappointing earnings for Q4 2021. FuelCell’s operating losses widened to $22.5 million over the quarter and sales unexpectedly declined around 18% year-over-year to around $13.9 million, due to lower service agreements and license revenue. Besides this, high-growth, high multiple stocks, in general, have also been weighed down by the prospect of rising interest rates through 2022.

Given that FCEL stock is down 26% over the last month, will it continue its downward trajectory, or is a rise imminent? Going by historical performance, there is a higher chance of a decline in FCEL stock over the next monthOut of 282 instances in the last ten years that FCEL stock saw a twenty-one-day fall of 26% or more, 97 of them resulted in FCEL stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 97 out of 282, or a mere 34% chance of a rise in FCEL stock over the coming month, implying that FCEL stock may not be a good bet in the near term. See our analysis on FuelCell Energy Stock Chance of A Rise for more details.

While FCEL stock may see lower levels going forward, it is helpful to see how its peers stack up. Check out FuelCell Energy Stock Comparison With Peers to see how FCEL stock compares against peers on metrics that matter. You can find more useful comparisons on Peer Comparisons.

Calculation of ‘Event Probability’ and ‘Chance of Rise’ using last ten years data

  • After moving 4.1% or more over a five-day period, the stock rose in the next five days on 41% of the occasions.
  • After moving -17% or more over a ten-day period, the stock rose in the next ten days on 49% of the occasions
  • After moving -26% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 34% of the occasions.

This pattern suggests that there is a lower chance of a RISE in FCEL stock in the near term.

Below you’ll find our previous coverage of  FuelCell Energy stock where you can track our view over time.

[10/22/2021] Up 12% Last Week, What’s Next For FuelCell Energy Stock?

The stock price of FuelCell Energy (NASDAQ:FCEL), a company that designs, manufactures, and operates fuel cell power plants that work on natural gas or biogas, has risen by 12% over the last week (five trading days), compared to the S&P 500 which was up 2.5% over the same period. The stock also remains up by about 22% over the last month (about 21 trading days). There are a couple of factors driving the recent gains. Firstly, FuelCell published a smaller than anticipated loss for Q3 2021 in September, with its gross margins turning positive after several consecutive quarters in the red. The company’s revenue growth rate was also better than expected, likely giving investors some confidence that the company could turn profitable as it continues to scale up.  Separately, Plug Power, a high-profile player in the hydrogen market, announced multiple corporate partnerships last week and noted that its sales could rise to over $800 million in 2022 while rising to over $3 billion by 2025. This news appears to have lifted other hydrogen stocks, including FuelCell Energy.

Now, is FCEL stock poised to grow? Based on our machine learning analysis of trends in the stock price over the last ten years, there is only a 46% chance of a rise in FCEL stock over the next month (twenty-one trading days). See our analysis on FuelCell Energy Chance Of Rise for more details.

Five Days: FCEL 12%, vs. S&P 500 2.5%; Outperformed market

(13% Event Probability)

  • FuelCell stock rose 12% over a five-day trading period ending 10/21/2021, compared to the broader market (S&P500) which rose by 2.5%.
  • A change of 12% or more over five trading days has a 13% event probability, which has occurred 324 times out of 2516 times in the last ten years.

Ten Days: FCEL 28%, vs. S&P500 3.4%; Outperformed market

(7% event probability)

  • FuelCell stock rose 28% over the last ten trading days (two weeks), compared to the broader market (S&P500) rise of 3.4%.
  • A change of 28% or more over ten trading days has a 7% event probability, which has occurred 167 times out of 2516 times in the last ten years. 

Twenty-One Days: FCEL 22%, vs. S&P500 3.6%; Outperformed market

(14% event probability)

  • FuelCell stock rose 22% over the last twenty-one trading days (one month), compared to the broader market (S&P500) rise of 3.6%.
  • A change of 22% or more over twenty-one trading days has a 14% event probability, which has occurred 349 times out of 2516 times in the last ten years. 

See our theme on Hydrogen Economy Stocks for an overview of U.S. companies that sell hydrogen fuel cells, related renewable energy equipment, and supply hydrogen gas.

[8/16/2021] Is FuelCell Energy Stock A Buy After Recent Drop?

The stock price of FuelCell Energy (NASDAQ:FCEL), a company that designs, manufactures, and operates fuel cell power plants that work on natural gas or biogas, has seen its stock decline by about 3% over the last five trading days and remains down by about 12% over the last month. In comparison, the S&P 500 is up about 1% over the last week. The decline comes after the U.S. Senate passed the $1 trillion-plus infrastructure bill. While the passage of the bill, which contains billions of dollars in fundings for fuel cell technologies, is apparently positive for FuelCell Energy, there might still be challenges before the bill becomes law. Considering this, investors were likely booking some profits in FuelCell stock, which rallied by about 20% in the days ahead of the bill’s passage. So will FuelCell Energy stock fall further or is a recovery looking likely? FCEL stock has a 61% chance of a decline over the next month after falling by 12% over the last month, per the Trefis Machine Learning Engine, which analyzes historical stock price data. See our dashboard analysis FuelCell Energy Stock Chances Of Rise for more details.

So, is FuelCell Energy stock a buy for the long-term? We don’t think so. FuelCell’s products, although apparently more economical compared to rivals, are bulkier and less flexible, and uptake has been weak in recent years. Revenues declined steadily from $108 million in 2016 to $71 million in 2020, due to falling product sales although this has been compensated to an extent by legacy power generation contracts.  The company is unlikely to see much growth in 2021 either. Moreover, the stock trades at an expensive 27x projected 2021 revenues. In comparison, rival BloomEnergy trades at just about 4x 2021 revenues and is expected to see more steady growth, as well. Considering this, we do not think that FuelCell Energy is a compelling bet on the fuel cell market.

[3/15/2021] Should You Buy FuelCell Energy Stock After 40% Increase Last Week?

The stock price of FuelCell Energy (FCEL), a company that designs, manufactures, and operates fuel cell power plants that work on natural gas or biogas, has seen its stock rally by about 41% over the last five trading days, although it remains down by about -31% over the last month (21 trading days). In comparison, the S&P 500 is up about 3% over the last week. Although there weren’t too many specific developments relating to the company over the last week, investors likely bought into the stock following the recent correction and also due to anticipation surrounding its quarterly earnings which are due shortly. More broadly, renewable energy stocks have been in favor with investors, driven by expectations of a favorable regulatory environment, with Democrats holding control of both the White House, the House of Representatives, and the Senate. So will FuelCell Energy stock fall following these solid gains or is it likely to rally further? FCEL stock has a 53% chance of a decline over the next month after rising by about 41% over the last five trading days, per our Machine Learning Engine, which analyzes five years of stock price data. See our dashboard analysis FuelCell Energy Stock Chances Of Rise

Now is FuelCell Energy stock a buy for the long-term? We don’t think so. Although fuel cells are more reliable compared to wind and solar energy sources, while offering a lower carbon footprint compared to other traditional fossil fuel-based generators, FuelCell energy doesn’t look like a compelling bet on the space. The company has been around for decades and hasn’t reported a profit or generated free cash flow for over 20 years. The company’s products, although apparently more economical compared to rivals, are bulkier and less flexible and uptake has been weak in recent years. Revenues have declined steadily from $108 million in 2016 to $71 million in 2020, due to falling product sales although this has been compensated to an extent by legacy power generation contracts.  Now, although the recent rally has enabled the company to issue new stock and recapitalize its balance sheet, reducing some risk for shareholders, there are cheaper ways to play the fuel cell market. For instance, rival Bloom Energy (NYSE:BE), which has grown relatively consistently in recent years, trades at just about 5x forward revenues, while FuelCell Energy trades at a far steeper 60x.

[1/6/2021] Pick Bloom Over FuelCell

The stocks of hydrogen and fuel cell makers fared well last year, driven by increasing interest in clean energy, the recent extension of tax credits for fuel cell projects, and the election of Democrat Joe Biden to the U.S. presidency – who has proposed to spend as much as $2 trillion on fighting climate change. Bloom Energy (NYSE:BE) and FuelCell Energy (NASDAQ: FCEL), two well-known names in the fuel cell market, saw their stock prices soar by 3.5x and 5x, respectively, over 2020. Let’s take a look at the two companies a little more closely to find out which could be the better pick for investors. See our analysis Bloom Energy vs. FuelCell Energy: BE stock looks very undervalued compared to FCEL stock for more details on how the financial and valuation metrics for the two companies compare.

Bloom Energy sells solid oxide fuel cell generators called Bloom Energy Servers which generate electricity from natural gas or biogas via an electrochemical process without combustion. These servers essentially replace diesel generators in commercial and industrial uses and help to cut carbon dioxide pollution by over two-thirds. While FuelCell Energy (NASDAQ: FCEL) also designs and manufactures fuel cells, the company’s focus has been on larger fuel-cell power plants. The company’s systems are bulkier and less flexible compared to Bloom’s.

Bloom’s Revenues have expanded from around $366 million in 2017 to about $758 million over the last 12 months, driven by growing installations of its servers. For instance, with power outages and wildfires in recent years in California, companies started to work with Bloom’s products. FuelCell, on the other hand, has seen its revenue decline from around $96 million to $65 million over the same period, as its product revenues collapsed although it continues to earn revenue from some legacy power generation contracts as well as service and licensing Revenue. Bloom has also reduced its losses, with Operating Margins improving from about -46% to about -17.5% between 2017 and the last 12 months. FuelCell on the other hand has seen its margins deteriorate from -47% to about -85% in the same period.

Now let’s look at the relative valuation of the two companies. FuelCell Energy trades at a much higher price to sales multiple of 40x, compared to about 5x for Bloom. This doesn’t make sense, considering that both companies operating in the same industry with Bloom apparently working with superior technology. Moreover, Bloom has more than doubled its Revenue since 2017, while FuelCell has seen sales decline by about one-third over the same period. Considering this, we think that Bloom Energy is currently the better pick of the two stocks.

[12/11/2020] Stocks To Play The Hydrogen Economy

Interest in clean energy stocks has soared this year, driven by low-interest rates, improving economics, and the election of Democrat Joe Biden – who has proposed to spend as much as $2 trillion on fighting climate change – to the U.S. presidency. While solar and electric vehicle stocks have been the most high profile winners, another theme that appears to have caught investors’ interest is the concept of the “hydrogen economy” or the use of hydrogen as a fuel for transportation and other energy requirements, replacing fossil fuels.

Hydrogen burns much cleaner than petroleum-based fuels and can be produced using just water and energy or from hydrogen-rich gases such as methane. Hydrogen is also seen as a means of storing excess renewable electricity – as the electricity can be used to run a process of electrolysis, which converts water into hydrogen. Our theme of Hydrogen Economy Stocks includes the stocks of U.S. based companies that sell fuel cells, renewable energy equipment, and supply hydrogen gas. Below is a bit more about the companies in our theme and how they fit into the broader picture of the Hydrogen Economy.

Bloom Energy (NYSE:BE) sells solid oxide fuel cell generators called Bloom Energy Servers that use natural gas or biogas as fuel via an electrochemical process without combustion. The company also develops hydrogen fuel cells – that use only hydrogen gas as fuel. The stock is up 245% year-to-date.

FuelCell Energy (NASDAQ: FCEL) is a company that designs and manufactures carbonate and solid oxide fuel cells that run on hydrogen-rich fuels such as natural gas and biogas. The company also operates over 50 fuel cell power plants across the world. The stock is up 229% year-to-date.

Air Products and Chemicals (NYSE: APD), a company that sells gases and chemicals for industrial uses, is one of the world’s largest producers of hydrogen. Earlier this year, the company outlined plans to build a sizable hydrogen plant powered by 4 Gigawatts of renewable electricity in Saudi Arabia. The stock is up 14% year-to-date.

First Solar (NASDAQ:FSLR) is the largest U.S.-based solar panel manufacturer. Solar players could also stand to gain from the hydrogen economy as hydrogen can be produced from water by a process of electrolysis, using solar-generated electricity. Solar power typically sees intermittent production and supply-demand mismatches, so excess power could be “stored” in hydrogen. The stock is up 55% year-to-date.

Cummins (NYSE: CMI) – an industrials company best known for its engines and power generation products – has been working on hydrogen-based technologies for almost two decades. The company acquired Hydrogenics, a leading Canadian hydrogen fuel cell player last year. The stock is up 23% year-to-date.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.

Returns Jan 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 FCEL Return 2% 2% -75%
 S&P 500 Return -1% -1% 110%
 Trefis MS Portfolio Return -5% -5% 273%

[1] Month-to-date and year-to-date as of 1/6/2022
[2] Cumulative total returns since the end of 2016

Trefis
Market Beating Portfolios
Trefis 
Price Estimates

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



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