At the beginning of 2021, things for this integrated alternative energy developer looked promising. Then, the stock crashed to $5.58, from its February high of $27.96. Today…
I’ll analyze Fuelcell Energy Inc. (FCEL) to determine if this pull-back is a buying opportunity or not.
FCEL engages in manufacturing fuel cell technology platforms for power generation. The company offers various fuel cell products, which are used for multi-megawatt utility applications, microgrid applications, distributed hydrogen or use their thermal attributes for on-site heat and chilling applications for a broad range of applications. The company’s Carbonate Fuel Cell technology generates electricity directly from a hydrogen-rich fuel, such as natural gas or renewable biogas, by reforming the fuel inside the fuel cell to produce the needed hydrogen.
Interest in hydrogen fuel-cell technology has increased in recent years, as the transition to zero carbon emissions quickens. More and more carmakers are looking beyond electric battery vehicles and are raising their investments in this technology.
Since the beginning of the year, FCEL dipped a whopping 38%, underperforming the iShares Global Clean Energy ETF (ICLN), which lost 19.5% year-to-date.
FCEL is investing massively to lift its top line, but the company is a long way from being profitable
FCEL’s top-line growth appreciated by 8.2% year-on-year to $767m in 2021, as the fuel cell specialist lifted significantly CAPEX over the year, up to $599m in 2021 from $39m in 2020. Nevertheless, the company is struggling to generate a positive free cash flow. In the past years, free cash flow has oscillated around a negative figure of $400m yearly and with current prospects, analysts expect a deterioration of FCEL’s cash flow generation in 2022 and 2023 to -$480m and -$499m, respectively.
During the quarter, FuelCell started commercial operations at the 1.4-megawatt biogas project in San Bernardino, California, and commenced the commissioning process of the 7.4 MW platform in the U.S. Navy Submarine Base in Groton, Connecticut. Due to an elevated temperature found inside a component on one of the two installed plants, FCEL suspended the Groton commissioning, expecting to resume it in late September.
In addition, the company’s total costs and expenses increased to…
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