The hydrogen industry has been in focus since 2020, thanks to increasing concerns regarding climate change. Also, with governments worldwide aiming to reduce their carbon footprint over the next few decades, green hydrogen stocks have surged in popularity over the last two years. However, looming interest rate hikes and President Biden’s stalled Build Back Better bill have caused these stocks to lose momentum lately.
Facing several macroeconomic headwinds, including skyrocketing inflation rates, supply chain bottlenecks, and war between Russia and Ukraine, the hydrogen industry is expected to take a back seat in the near term. Bearish sentiment surrounding the hydrogen industry is evident in the Global X Hydrogen ETF’s (HYDR) 12.3% decline year-to-date.
Given these factors, we think it advisable to avoid fundamentally bleak hydrogen stocks Plug Power Inc. (PLUG), Ballard Power Systems Inc. (BLDP), and FuelCell Energy, Inc. (FCEL).
Plug Power Inc. (PLUG)
PLUG in Latham, N.Y. offers hydrogen fuel cell solutions for the power markets in North America and Europe. PLUG is focused on proton exchange membrane (PEM) fuel cell technologies, green hydrogen generation, storage, and dispensing infrastructure. The company provides products that include GenDrive, GenFuel, GenCare, ProGen engines, GenSure, and GenKey. It offers its products through a direct product sales force, manufacturers, and dealer networks.
Last month, PLUG entered a strategic collaboration with Atlas Copco Gas and Process and Fives to expand offerings for the global hydrogen liquefaction market. It is expected to introduce hydrogen liquefier trains with 15-ton-per-day and 30-ton-per-day capacities by 2023. But it might take some time to realize the gains from this strategic partnership.
In its fiscal 2021 third quarter, ended Sept. 30, 2021, PLUG's total operating expenses increased 162.7% year-over-year to $67.59 million. PLUG's operating loss grew 81.7% year-over-year to $98.66 million. Its loss before income taxes rose 48.4% year-over-year to $106.67 million. Its net loss attributable to the company increased 63.6% year-over-year to $106.67 million, and net loss per share increased 5.6% from its year-ago value to $0.19.
The Street expects PLUG's loss per share to amount to $0.11 for its fiscal 2021 fourth quarter, ended December 31, 2021.
The stock has declined 10.4% in price year-to-date and 48.2% over the past year. PLUG closed yesterday's trading session at $25.29.
PLUG's POWR Ratings are consistent with this bleak outlook. The company has an overall F rating, which translates to Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
PLUG has an F grade for Value, Quality, Stability, and Sentiment and a D grade for Momentum. Within the Industrial - Equipment industry, it is ranked #89 of 92 stocks.
To see PLUG's POWR Rating for Growth, click here.
Ballard Power Systems Inc. (BLDP)
BLDP designs, develops, manufactures, and sells proton exchange membrane fuel cell products primarily in Canada. It is headquartered in Burnaby, Canada. BLDP offers marine systems, fuel cell stacks, heavy-duty modules, backup power systems, technology solutions, and material handling products. It serves transit bus, marine, material handling, power, truck, and automotive markets.
On Jan. 13, 2022, BLDP reported orders for 31 hydrogen fuel cell engines from a leading global construction, electric power, and off-road equipment manufacturer. These modules are expected to be delivered in 2022 and 2023. So, it might take a while to realize profits from this partnership.
BLDP's gross margin decreased 41% year-over-year to $2.83 million in its fiscal 2021 third quarter, ended Sept. 30, 2021. BLDP’s total operating expenses grew 118.6% year-over-year to $27.44 million. Its net loss from continuing operations for the period increased 175.1% year-over-year to $30.84 million. And its net loss and loss per share for the period came in at $30.85 million and $0.10, respectively, registering an increase of 162.4% and 100% from the same period last year.
The negative $0.07 consensus EPS estimate for its fiscal 2021 fourth quarter, ended Dec. 31, 2021, represents a 23.4% year-over-year decline from the same period in 2020.
Shares of BLDP have declined 9.1% in price year-to-date and 59.5% over the past year. It closed yesterday's trading session at $11.42.
BLDP's POWR Ratings reflect its poor prospects. The company has an overall F rating, which translates to Strong Sell in our proprietary rating system.
BLDP has an F grade for Stability and Sentiment. It has a D grade for Momentum, Growth, Value, and Quality. To see more of BLDP’s component grades, click here.
It is ranked #90 of 92 stocks in the Industrial - Equipment industry.
FuelCell Energy, Inc. (FCEL)
FCEL is an integrated fuel cell company. The Danbury, Conn., concern designs, manufactures, sells, operates, and services stationary fuel cell power plants for distributed baseload power generation. The company offers various fuel cell products used for microgrid, multi-megawatt utility, distributed hydrogen, and on-site heat and chilling applications. FCEL serves multiple markets, including utilities and power producers, healthcare, data centers and communication, industrial, commercial, and hospitality.
In December, FCEL closed a $12.7 million tax equity financing transaction with Franklin Park for a 7.4-megawatt fuel cell project in Yaphank, Long Island, New York.
In its fiscal 2021 fourth quarter, ended Oct. 31, 2021, FCEL's total revenues decreased 18% year-over-year to $13.94 million. Its gross loss increased 4% year-over-year to $8.37 million. The company's loss from operations grew 31.7% year-over-year to $22.55 million, and its adjusted EBITDA decreased 38.7% year-over-year to a negative $11.86 million. In addition, the company's net loss attributable to common stockholders grew 27.1% year-over-year to $24.98 million.
Analysts expect FCEL's loss per share to amount to $0.05 for its fiscal year 2022 first quarter, ended January 31, 2022.
FCEL’s shares have decreased 65.8% in price over the past year and closed yesterday's trading session at $6.00.
FCEL's POWR Ratings reflect this bleak outlook. It has an overall rating of F, which translates to Strong Sell in our POWR Ratings system.
It has a grade of F for Sentiment, Stability, Value, and Quality. FCEL has a D for Momentum. It is ranked #91 of 92 stocks in the Industrial - Equipment industry.
Click here to see FCEL's POWR Rating for Growth.
PLUG shares were trading at $25.49 per share on Tuesday morning, up $0.20 (+0.79%). Year-to-date, PLUG has declined -9.71%, versus a -8.50% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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