The Fed announced a 75 basis-point interest rate hike today for the third consecutive time. Moreover, the central bank officials now expect the key rate to end 2022 at a range of 4.25% to 4.5%, which suggests another outsize rate hike in its November meeting.
Goldman Sachs (GS) recently cut its forecast for 2023 GDP to 1.1%, down from its prior projection of 1.5%, as aggressive rate hikes will likely push the jobless rate higher than expected. Moreover, with the world’s largest economies slowing, the World Bank has warned that even a “moderate hit to the global economy over the next year could tip it into recession.”
The Fed’s aggressive interest rate hike is expected to keep the stock market under pressure. Therefore, considering their bleak fundamentals, it might be best to avoid Plug Power Inc. (PLUG) and Bed Bath & Beyond Inc. (BBBY).
Plug Power Inc. (PLUG)
PLUG is a leading provider of comprehensive hydrogen fuel cell (HFC) turnkey solutions. The company offers end-to-end clean hydrogen and zero-emissions fuel cell solutions for supply chain and logistics applications, on-road electric vehicles, the stationary power market, and more.
PLUG also manufactures and sells fuel cell products to replace batteries and diesel generators in stationary backup power applications.
On August 25, PLUG signed a hydrogen supply deal with Amazon (AMZN) to provide liquid green hydrogen to help decarbonize Amazon’s operations as part of its commitment to be net-zero carbon by 2040. However, the company is expected to start supplying in 2025.
During the second quarter that ended June 30, 2022, PLUG’s total operating expenses increased 131.9% year-over-year to $114.44 million. The company’s operating loss rose 63.9%from the year-ago value to $146.91 million. Its net loss increased 73.9% year-over-year to $173.30 million, while its loss per share grew 66.7% year-over-year to $0.30.
The consensus EPS estimate of negative 0.94 for the fiscal year ending December 2022 represents a decline of 14.9% year-over-year. The consensus revenue is estimated to be $918.79 million.
The stock has declined 12.2% over the past five days to close the last trading session at $26. The stock plunged 6.2% intraday.
PLUG’s POWR Ratings are consistent with this bleak outlook. The stock has an overall rating of F, which translates to a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an F grade for Stability and Quality and a D for Growth, Value, and Sentiment. Within the Industrial – Equipment industry, it is ranked #87 of 90 stocks.
Beyond what we’ve stated above, we have also given PLUG grades for Momentum. Get all PLUG ratings here.
Bed Bath & Beyond Inc. (BBBY)
BBBY operates a chain of retail stores. The company sells a range of domestic merchandise, home furnishings, and other juvenile products. The company owns more than 953 stores and offers its products through various websites and applications.
On September 15, BBBY reported shutting more stores, including one in the South Sound. The company had already announced in August that it was closing 150 “low performing” locations stores in an effort to improve performance. The closure of stores could lead to lower sales in the short run.
BBBY’s net sales decreased 25.1% year-over-year to $1.46 billion in the fiscal first quarter ended May 28, 2022. Its operating loss rose 371.9% year-over-year to $339.16 million, while its gross profit declined 44.9% from the year-ago value to $349.31 million. The company’s adjusted net income per share declined 5,760% to a negative $2.83.
Analysts expect BBBY’s EPS to decline 496.2% year-over-year to a negative 1.49 in the third fiscal quarter ending November 2022. The company’s revenue is likely to fall 21.9% year-over-year to $1.47 billion in the same quarter.
BBBY has declined 67.8% over the past year and 5.35% intraday to close its last trading session at $7.60. The stock has plunged 65.6% year-to-date.
It’s no surprise that BBBY has an overall D rating, which translates to Sell in our POWR Ratings system.
It has a grade of F for Stability and Sentiment and a D for Growth and Momentum. The stock is ranked #58 out of the 62 stocks in the Home Improvement & Goods industry.
To see the additional POWR Ratings for Value and Quality for BBBY, click here.
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PLUG shares fell $0.14 (-0.55%) in after-hours trading Wednesday. Year-to-date, PLUG has declined -9.60%, versus a -19.62% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More...
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