While the U.S. oil output is recovering from the pandemic lows, the sanctions on Russian oil have cut into the country’s oil stockpiles. With limited scope for further reserve release, the average price at the pump is expected to top $6 by September. And President Biden’s recent letter to oil refineries about high gasoline prices is not likely to help curb the price increases. The rising energy prices are benefitting the oil and gas stocks.
On the other hand, President Biden has suggested that the United States has a chance of turning to green energy. However, the transition might be affected by the recessionary concerns.
The renewable energy sector seems far from ready to meet global energy needs. According to the Renewables 2022 Global Status Report, the anticipated transition to clean energy is not happening, with fossil fuels fulfilling most of the rebound in energy demand.
With the substitution of fossil fuels by renewables contingent upon certain uncertainties, we think it might not be the right time to invest in fundamentally weak renewable energy stocks Plug Power Inc. (PLUG), Ormat Technologies, Inc. (ORA), SolarEdge Technologies, Inc. (SEDG), and Vestas Wind Systems A/S (VWDRY).
Plug Power Inc. (PLUG)
PLUG is a hydrogen fuel cell turnkey solutions provider used for electric mobility and stationary power markets. The company’s offerings include GenDrive, a liquid hydrogen-fueled proton exchange membrane (PEM) fuel cell, GenFuel, a liquid hydrogen fueling delivery and dispensing system, and GenCare, an IoT-based maintenance and service program.
On June 8, PLUG announced its plans to build a 35-tons-per-day green hydrogen generation plant at Port of Antwerp-Bruges, Europe. However, the plant’s construction is expected to begin in late 2023, and initial green hydrogen is not expected to be produced before 2024.
For the fiscal first quarter ended March 31, PLUG’s net revenue increased 95.7% year-over-year to $140.80 million. However, its net loss rose 157.6% from the prior-year quarter to $156.49 million. Net loss per share increased 125% from the same period the prior year to $0.27.
The consensus EPS estimate of a negative $0.19 for the quarter ending June 2022 indicates a 5.6% year-over-year decrease. Moreover, PLUG has missed the consensus EPS estimates in each of the trailing four quarters.
The stock has declined 44.5% over the past year and 41.3% year-to-date to close its last trading session at $16.58.
PLUG’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.
PLUG has a Stability, Sentiment, and Quality grade of F and a Growth and Value grade of D. In the 92-stock Industrial – Equipment industry, it is ranked #90.
Click here to see the additional POWR Ratings for PLUG (Momentum).
Ormat Technologies, Inc. (ORA)
ORA operates as a geothermal and recovered energy power business globally. The company operates through the three broad segments of Electricity; Product; and Energy Storage.
On June 21, ORA announced its intention to offer a $350 million aggregate principal amount of Green Convertible Senior Notes due 2027. The company intends to use the net proceeds to repurchase shares of its common stock and for general corporate purposes.
ORA’s total revenues increased 10.4% year-over-year to $183.71 million in the fiscal first quarter ended March 31. On the other hand, adjusted net income attributable to the company’s stockholders and adjusted EPS came in at $19.90 million and $0.35, down 17.5% and 17% from the prior-year period.
Analysts expect ORA’s EPS to decline 8.7% and 12.5% year-over-year to $0.21 and $0.28 for the respective quarters ending June and September 2022.
ORA’s stock has declined 5.5% year-to-date and 1.8% over the past month to close its last trading session at $74.96.
It’s no surprise that ORA has an overall D rating, which translates to Sell in our POWR Rating system. ORA has an F grade for Value and a D grade for Growth and Sentiment. It is ranked #35 out of the 36 stocks in the Industrial – Manufacturing industry.
To see the additional POWR Ratings for Momentum, Stability, and Quality for ORA, click here.
SolarEdge Technologies, Inc. (SEDG)
SEDG, headquartered in Herzliya, Israel, develops and sells direct current (DC) optimized inverter systems for solar photovoltaic (PV) installations. The company operates through the Solar; Energy Storage; e-Mobility; Critical Power; and Automation Machines, offering inverters, power optimizers, and communication devices.
On May 25, SEDG and its subsidiary Kokam Limited Company announced opening its two gigawatt-hour (GWh) battery cell manufacturing facility in the Eumseong Innovation City of Chungcheongbuk-Do, South Korea. However, there might still be some time before substantial gains can be realized from Sella 2.
For the fiscal first quarter ended March 31, SEDG’s cost of revenues increased 79.4% year-over-year to $476.12 million, while its total operating expenses rose 33.5% from the same period the prior year to $128.09 million. Net cash provided by operating activities decreased 776.8% from the prior-year period to a negative $162.99 million.
Street EPS estimate for the quarter ending June 2022 of $1.39 reflects an 8.6% year-over-year increase.
The stock has declined 9.3% over the past three months to close its last trading session at $283.10.
SEDG has an overall D rating, equating to Sell in our proprietary rating system. The stock has a Value, Stability, and Quality grade of D. In the 19-stock Solar industry, it is ranked #12. The industry is rated F.
Click here to see the additional POWR Ratings for Growth, Momentum, and Sentiment for SEDG.
Vestas Wind Systems A/S (VWDRY)
VWDRY engages in the design, manufacture, installation, and servicing of wind turbines worldwide. The company operates through the two broad segments of Power Solutions, selling wind power plants, wind turbines, and development sites; and Service, which sells service contracts, spare parts, and related activities. It is headquartered in Aarhus, Denmark.
VWDRY’s gross profit decreased 88.4% year-over-year to €22 million ($23.19 million) in the fiscal first quarter of 2022. Profit for the period and EPS declined 1,095.3% and 985.7% from the prior-year quarter to a negative €765 million ($806.31 million) and a negative €0.76.
Street expects EPS to come in at a negative $0.03 for the fiscal second quarter (ending June 2022). Likewise, Street revenue estimate for the same quarter of $3.55 billion indicates a 14.5% year-over-year decline.
VWDRY’s shares have declined 35% over the past year and 20.4% year-to-date to close its last trading session at $8.10.
VWDRY has an overall rating of D, which translates to Sell in our POWR Rating system. The stock has an F grade for Sentiment and a D for Growth. It is ranked #35 out of the 45 stocks in the Technology – Hardware industry.
In addition to the POWR Rating grades we’ve stated above, one can see VWDRY ratings for Value, Momentum, Stability, and Quality here.
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PLUG shares were trading at $17.10 per share on Wednesday afternoon, up $0.52 (+3.14%). Year-to-date, PLUG has declined -39.43%, versus a -20.42% 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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