Green hydrogen is a sustainable energy source produced from regenerative energy sources through water electrolysis. According to the Allied Market Research report, the global green hydrogen market is expected to grow from $0.3 billion in 2020 to $9.8 billion by 2028, showing a CAGR of 54.7% during the forecast period.
Over the past month, the green hydrogen industry experienced a sharp correction, as evidenced by the 27% decrease in the Global X Hydrogen ETF (HYDR), compared to SPDR S&P 500 Trust ETF (SPY) 8% loss over the same period. Consequently, this drop provides investors’ the opportunity to scoop up shares of hydrogen stocks on the dip.
In this article, I’ll analyze and compare two hydrogen stocks, Plug Power Inc. (PLUG) and FuelCell Energy, Inc. (FCEL), to determine which one is currently a better buy. PLUG is a leading maker of hydrogen cells for electric mobility and stationary power markets in North America and Europe. FCEL engages in manufacturing, selling, and servicing stationary fuel cell power platforms for baseload power generation.
Over the past month, PLUG stock has dropped about 32%, and FCEL has fallen 28%.
On January 26th, Biju Perincheril, an analyst from Susquehanna, started coverage of Plug Power with a “Positive” rating. The analyst noted that the company could potentially generate double-digit annual top-line growth amid the development of the green hydrogen ecosystem in the forthcoming years. The firm set a $26 price target for PLUG.
On January 12th, FuelCell Energy announced that it had finished construction and started commercial operation of its 7.4 megawatts SureSource™ fuel cell project, located on Long Island, New York. The company’s CEO, Jason Few, said, “Utilizing three of our fuel cell platforms, we will deliver to the grid 24/7 power that is enough to power approximately 7,500 homes from a footprint …”
Recent Quarterly Performance & Analysts Estimates
For its fiscal third quarter, ended September 30th, 2021, Plug Power’s total revenue grew 34.5% year-over-year to $143.9 million. This growth was primarily driven by a 39.8% year-over-year increase in revenue from sales of fuel cell systems and related infrastructure to $116 million. However, the company missed the Wall Street revenue estimates by $0.92 million.
In Q3, its net loss increased to $106.67 million compared to $65.22 million in a year-ago quarter. As a result, PLUG disclosed a GAAP Q3 EPS of ($0.19), missing analysts’ consensus by $0.10.
For the next quarter, analysts project PLUG’s EPS to be ($0.11), representing an 89.90% increase compared to its year-ago figure. Moreover, a $157.12 million average revenue projection for the fourth quarter of 2021 implies 63.20% year-over-year growth.
On December 29th, FuelCell Energy reported earnings for the fourth fiscal quarter of 2021. In Q4, the company’s total revenue decreased 18.0% year-over-year to $13.94 million, substantially missing Wall Street estimates by $7.61 million. The main reason for the earnings miss was a $5.6 million decrease in service agreements and license revenues. Additionally, the fuel cell technology company disclosed a GAAP EPS of ($0.07), missing analysts’ consensus by $0.04.
The company’s fourth-quarter Adjusted EBITDA loss came in at $11.86 million compared to a loss of $8.55 million as of Q4 2020.
Analysts reached a consensus EPS estimate of ($0.05) for the first fiscal quarter of 2022, representing a 67.30% year-over-year increase. Additionally, Wall Street expects the company’s revenue to increase by 76.15% year-over-year to $26.21 million in FQ1 2022.
Comparing Options Market Sentiment
Looking at the February 11th, 2022, option chain for both PLUG and FCEL, let’s figure out options market sentiment by analyzing the calls/puts ratio. In PLUG’s case, the open calls/open puts ratio at the $20.00 strike price comes in at 1.18x, implying a neutral options market sentiment. The open calls/open puts ratio for FCEL at the $4.00 strike price is 0.35x, indicating a bearish options market sentiment.
While both hydrogen companies should be able to capitalize on the industry’s growth in the long term, I believe that PLUG is currently a better investment based on its superior financials, higher forward growth rates, and better open calls/puts ratio.
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PLUG shares were trading at $18.99 per share on Thursday morning, down $0.48 (-2.47%). Year-to-date, PLUG has declined -32.73%, versus a -7.42% rise in the benchmark S&P 500 index during the same period.
About the Author: Oleksandr Pylypenko
Oleksandr Pylypenko has more than 5 years of experience as an investment analyst and financial journalist. He has previously been a contributing writer for Seeking Alpha, Talks Market, and Market Realist. More...
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