Renewable energy company Advent Technologies Holdings, Inc. (ADN - Get Rating) operates as an advanced materials and technology development company that functions in the fuel cell and hydrogen technology market. The company manufactures and assembles fuel cell systems and critical components that determine the performance of hydrogen fuel cells. The company’s offerings include the high-temperature proton exchange membrane (HT-PEM) fuel cells and electrode assemblies.

On April 6, ADN announced the signing of a technology assessment, sales, and development agreement with multinational automotive manufacturer Hyundai Motor Company (HYMTF). The companies, through this collaboration, intend to provide green energy solutions to high carbon applications leveraging fuel cell technology. Under the agreement, HYMTF is expected to provide catalysts to ADN for evaluation in its proprietary Membrane Electrode Assemblies (MEAs). On the other hand, ADN intends to support the automotive company in fulfilling its fuel cell project needs.

Over the past year, ADN’s stock has declined 81.3%, 64.9% year-to-date, and 18% over the past month to close yesterday’s trading session at $2.46. However, the stock has gained 4.7% intraday.

Here is what could shape ADN’s performance in the near term.

Bleak Bottom line

For the fiscal fourth quarter ended December 31, ADN’s revenue increased 713.8% year-over-year to $2.90 million. However, its gross profit declined 27% from the prior-year quarter to $0.16 million. Net loss per share came in at $0.18, up 157.1% from the prior-year period. Adjusted net loss rose 835.9% from the same period the prior year to $15.91 million.

Weak Trailing-12-month Financials

ADN’s trailing-12-month net income and EPS stand at a negative $20.52 million and $0.45. Its trailing-12-month operating income and EBITDA came in at a negative $35.80 million and $34.06 million.

Its trailing-12-month levered free cash flow and cash from operations stood at a negative $20.06 million and $35.84 million.

Lean Profit Margins

ADN’s gross profit margin of 23.52% is 19.14% lower than the industry average of 29.09%. Its net income margin and levered FCF margin of a negative 290.34% and 283.76% are substantially lower than their respective industry averages of 6.57% and 4.40%.

ADN’s ROE, ROTC, and ROA of a negative 31.97%, 34.80%, and 12.59% compared with their respective industry averages of 13.76%, 6.94%, and 5.17%.

POWR Ratings Reflect Bleak Prospects

ADN’s POWR Ratings reflect this bleak outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

ADN has a Value grade of D, in sync with its forward Price/Sales multiple of 5.15, 287% higher than the industry average of 1.33. The stock has a D grade for Momentum, which is justified as it is trading below its 50-day and 200-day Moving Averages of $2.96 and $6.59. Its Quality grade of D is consistent with its bleak profit margins.

In the 93-stock Industrial Equipment industry, ADN is ranked #83.

Click here to see the additional POWR Ratings for ADN (Growth, Stability, and Sentiment).

View all the top stocks in the Industrial Equipment industry here.

Bottom Line

ADN’s recent agreement with HYMTF is expected to benefit the company in the long term. However, its negative ROE and bleak bottom line are concerning. Therefore, I think it might be best to avoid the stock now.

How Does Advent Technologies Holdings, Inc. (ADN) Stack Up Against its Peers?

While ADN has an overall POWR Rating of F, one might consider looking at its industry peers, Preformed Line Products Company (PLPC - Get Rating), Standex International Corporation (SXI - Get Rating), which have an overall A (Strong Buy) rating, and Simpson Manufacturing Co., Inc. (SSD - Get Rating), which has an overall B (Buy) rating.

ADN shares were trading at $2.34 per share on Thursday afternoon, down $0.12 (-4.88%). Year-to-date, ADN has declined -66.62%, versus a -7.31% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...

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