FCEL: Fuel Cell Energy is Down 20% in 2021. Time to Buy?
29 Novembro 2021 - 7:18AM
Finscreener.org
Renewable energy has been the
talk of the town for over a decade now. Analysts and
policymakers around the
world have reiterated
multiple times that fossil fuels are on their way out but the
recent run-up in crude oil prices belies that belief.
Fuel Cell Energy (NASDAQ:
FCEL) makes hydrogen
power plants, and its customers include utility companies,
municipalities, universities, hospitals, government
entities/military bases, and a variety of industrial and commercial
enterprises. The company’s major markets are the United States and
South Korea.
However, it is a fact that Fuel
Cell is a renewable energy company that has been part of the sector
that hasn’t seen a run-up in its stock price even as stock markets
have hit record highs. Its stock has fallen by almost 20% in 2021.
Comparatively, the S&P 500 index has gained 27% in the first
11 months of the current year.
The stock surged in January and
February this year, hitting $26 levels but has since then come down
to earth with a thud and closed trading at $8.94 on November
26.
Has FCEL stock bottomed out?
There are two views to FCEL
stock. Shares have been stuck at the same levels since July this
year. Should the last four months be seen as a period of
consolidation for the stock? Will Fuel Cell finally break out in
the last month of 2021?
In September, the company
reported its results for the third quarter of 2021, ending July 31.
The numbers were solid compared to the third quarter of 2020.
Revenues came in at $26.8 million compared to $18.7 million. The
company reported a gross profit of $1.1 million compared to a gross
loss of $3.1 million in the corresponding period in
2020.
Fuel Cell has cash and cash
equivalents of $468.6 million as of July 31, 2021, compared to
$149.9 million as of October 31, 2020. However, its backlog fell a
smidge and stood at $1.3 billion on July 31, 2021, compared to
$1.33 billion on July 31, 2020.
When you take into account the
fact that the company reported around $71 million in revenues for
the whole of 2020 and around $61 million in revenue for 2019, the
$26.7 million figure is a clear sign that the company has picked up
pace in 2021.
During the earnings call, Jason
Few, President and CEO, Fuel Cell Energy said, “[The company] is
working toward the goal of achieving an annualized manufacturing
production rate of 45 megawatts at our Torrington facility by the
end of the calendar year, up from 17 megawatts at the end of fiscal
2020.”
Why has Fuel Cell stock underperformed the S&P
500?
A major reason for FCEL stock’s
underperformance is because the market views the company as a
speculative investment. A quick Google search on fuel cells will
throw up a lot of information on electric cars. Even though fuel
cells are used in electric cars, Fuel Cell Energy has nothing to do
with them.
Fuel Cell Energy works with
utilities, and its biggest concern is how to keep the lights on
without polluting the environment. As hydrogen fuel becomes more
common, Fuel Cell Energy’s stock price should start moving
higher.
A stock like Fuel Cell tests the
patience of investors. If you believe in the story of green energy,
then Fuel Cell is a stock to hold. If you are someone who needs to
see a return in the short term, it would do advisable to move
on.
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