Hydrogen as an energy source  is gaining importance in the clean energy revolution. The U.S.  has long been a leader in global energy innovation and in the production of gaseous and liquid hydrogen. With the rising demand for clean energy alternatives worldwide hydrogen fuel cell technology has emerged as one of the key alternatives, with huge applications in the transportation and energy production sectors.

But the infrastructure to refuel hydrogen-powered vehicles is not yet in place, and it will require substantial time, investment, and government interest for it to be. Also, the cost of producing hydrogen needs to decline significantly for it to be competitive with the other clean energy sources.

Given the huge funding requirement for efficient hydrogen production, companies such as Plug Power, Inc. (PLUG), Ballard Power Systems, Inc. (BLDP) and FuelCell Energy, Inc. (FCEL) operating in this industry have been struggling to generate profits. Moreover, after riding the clean-energy wave, these stocks are trading at sky-high valuations with limited fundamental strength, we think, to justify their current price levels.

Plug Power, Inc. (PLUG)

PLUG provides hydrogen fuel cell turnkey solutions and fuel processing technologies for the electric mobility and stationary power markets in North America and Europe. The company provides its services to manufacturing businesses and through retail chains, dealers, and a direct sales force.

Despite a  79.9% revenue increase year-over-year to $106.99 million in the third quarter ended September 30, 2020, PLUG reported a gross loss of $1.29 million. Its net loss increased 117% from the year-ago value to $39.38 million, resulting in a loss per share of $0.11, up 37.5% over the three-month period.

Analysts expect PLUG’s revenues to decrease 7.8% year-over-year to $87.14 million in the about-to-be reported quarter (ended December 31, 2020). A consensus loss per share estimate of $0.07 for the fourth quarter represents  a 42.9% increase year-over-year. Also, PLUG  has missed the Street’s EPS estimates in three out of trailing four quarters.

The stock has gained 1562.4% over the past year. In terms of forward-12-month Price/Sales, the stock is currently trading at 102.61x, 6656.1% higher than the industry average of 1.52x.

PLUG’s POWR Ratings are consistent with this bleak outlook. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

The stock has an overall rating of F, which equates to Strong Sell in our proprietary rating system. PLUG has a grade of F for Stability, Value, Quality and Sentiment. It is currently ranked #90 in the 90-stock Industrial – Equipment industry.

In total, we rate PLUG on eight different levels. Beyond what we stated above, we also have given PLUG grades for Momentum and Growth. Get all of PLUG’s ratings here.

Ballard Power Systems, Inc. (BLDP)

Based in Canada, BLDP develops and commercializes proton exchange membrane (PEM) fuel cell products. The company offers heavy duty modules and fuel cell stacks to transit bus, automotive, rail, truck, material handling, UAV, marine, and critical infrastructure markets.

BLDP’s total revenues have decreased 22.1% year-over-year to $4.80 million in the third quarter ended September 30, 2020. Its net loss increased 20.2% from the year-ago value to $11.76 million, resulting in a loss per share of $0.05, up 25% over this period.

Analysts expect BLDP’s revenues to decrease 26.7% year-over-year to $30.68 million in the about-to-be reported quarter (ended December 31, 2020). A  consensus loss per share estimate of $0.05 for the fiscal 2020 represents  an 18.8% increase year-over-year.

The stock has gained 269.9% over the past year. In terms of its trailing-12-month price/sales ratio, the stock is currently trading at 74.36x, 4892.5% higher than the industry average of 1.49.

However, BLDP’s  top-line growth is not being translated into bottom-line profits. BLDP has been incurring losses through all its  years of revenue growth. Moreover, the company does not possess proprietary technology or know-how that cannot be replicated. Hence, we think it would be wise to stay away from the stock until the company trades in line with its current financial situation.

BLDP’s poor prospects are also apparent in its POWR Ratings. The stock has an overall rating of F, equating to Strong Sell in our proprietary rating system. BLDP has a grade of F for Value and Quality. In the same industry, the stock is ranked #89.

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

FuelCell Energy, Inc. (FCEL)

FCEL is an alternate energy pioneer that designs, manufactures, installs, operates, and services stationary fuel cell power plants for distributed power generation. The company’s SureSource power plants generate electricity and usable heat, which it serves to various markets such as utilities and independent power producers. The company operates primarily in  four segments – product, service and license, generation, and advanced  technologies.

Over the last year,  FCEL has received $3million in  funding support from the U.S. Department of Energy (DOE) and an$8 million award from the DOE in collaboration with the Office of Nuclear Energy. It has also raised approximately $156.3 million from an offering of 25 million shares of common stock. Yet, the company has not  been able to generate profits.

FCEL  reported a net loss of $19.66 million in the fiscal fourth quarter ended October 31, 2020, yielding a loss per share of $0.08. The company has also  missed the Street’s  EPS estimates in three of the  trailing four quarters.

The stock has gained 1247.8% over the past year. In terms its  forward-12-month price/sales, the stock is currently trading at 77.31x, 4990.3% higher than the industry average of 1.52x. Though the stock has been a beneficiary of the new energy revolution, this valuation is a real concern.

FCEL’s POWR Ratings are consistent with this bleak outlook. The stock has an overall rating of F, which equates to Strong Sell in our proprietary rating system. FCEL has a grade of F for Stability, Value, Quality and Sentiment.

We also have given FCEL grades for Growth and Momentum. Get all FCEL’s ratings here.

The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

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PLUG shares were trading at $67.67 per share on Thursday afternoon, up $0.29 (+0.43%). Year-to-date, PLUG has gained 99.56%, versus a 3.27% rise in the benchmark S&P 500 index during the same period.

About the Author: Rishab Dugar

Rishab is a financial journalist and investment analyst. His investment approach is to focus on quality stocks, trading at low prices, with business models that he readily understands. More...

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