Bloom Energy stock (NYSE: BE), a company that sells solid oxide fuel cell generators, has declined by about 23% over the last month, considerably underperforming the S&P 500 which remains down by 3.3% over the same period. There are a few broad factors driving the recent sell-off. Hydrogen stocks at large have underperformed recently due to the stalling of President Joe Biden’s social-spending and climate-focused Build Back Better plan, which had proposed to provide tax credits for hydrogen production. While we could see a scaled-back version of the plan in the coming weeks, the specifics are not clear, and this likely isn’t helping hydrogen stocks. Separately, growth and futuristic stocks have also been impacted by the prospect of rising interest rates and tighter monetary policy, and stocks such as Bloom, which remain loss-making, have been particularly badly hit.
Given that BE stock is down 23% over the last month, will it continue its downward trajectory, or is a rise imminent? Going by historical performance, there is a higher chance of a decline in BE stock over the next month. Out of 152 instances in the last four years that BE stock saw a twenty-one-day fall of 23% or more, 53 of them resulted in BE stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 53 out of 152, or a mere 35% chance of a rise in BE stock over the coming month, implying that BE stock may not be a good bet in the near term. See our analysis on Bloom Energy Stock Chance of A Rise for more details.
While BE stock may see lower levels going forward, it is helpful to see how its peers stack up. Check out Bloom Energy Peers to see how BE stock compares against peers on metrics that matter. You can find more useful comparisons on Peer Comparisons.
Calculation of ‘Event Probability’ and ‘Chance of Rise’ using last four years data
- After moving -2.4% or more over a five-day period, the stock rose in the next five days on 43% of the occasions.
- After moving -2.4% or more over a ten-day period, the stock rose in the next ten days on 44% of the occasions
- After moving -23% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 35% of the occasions.
This pattern suggests that there is a lower chance of a rise in BE stock in the near term.
Below you’ll find our previous coverage of Bloom Energy stock where you can track our view over time.
[11/22/2021] This Hydrogen Stock Is A Better Bet Compared To FuelCell Energy
The hydrogen and fuel cell space has come back into focus, with the $1.2 trillion U.S. infrastructure bill being recently signed into law and the Build Back Better act being passed by the House. Back in January, we noted that Bloom Energy, a company that sells solid oxide fuel cell generators, was a better pick to play the hydrogen economy compared to FuelCell Energy, a company focused on designing larger fuel-cell power plants. (see our update below) Now, eleven months hence, while both stocks have underperformed the market, Bloom has returned about 10%, while FuelCell remains down by about 7.5% year-to-date. So is there more upside to this trade? Yes. We think Bloom Energy is meaningfully undervalued compared to FuelCell. Our dashboard Bloom Energy vs FuelCell Energy: Which Stock Is A Better Bet? has more details on this. Parts of the analysis are summarized below.
Bloom is growing more quickly and consistently compared to FuelCell. Over the last twelve months, Bloom has grown revenue by 15.9%, compared to 11.9% for FuelCell. Looking at a longer period, Bloom’s sales rose by about 29.5% each year over the last three years, driven by growing installations of its generators. FuelCell, on the other hand, saw sales decline by about 9.5% on average annually, as its product revenues saw a sharp decline. Looking ahead, FuelCell is likely to see a bit of a recovery, with sales projected to rise by about 55% in 2022 per consensus estimates, compared to Bloom which could see sales rise by about 27% over the same period.
Coming to profitability, although both companies have been loss-making, Bloom has been cutting its losses. Bloom’s Operating Margins improved from about -46% to about -12.4% between 2017 and the last 12 months. FuelCell, on the other hand, has seen its margins deteriorate from -17% to about -117% over the same period.
Bloom Energy trades at just about 5x trailing revenue, while FuelCell Energy trades at about 55x trailing revenues. This doesn’t make sense, considering that both companies operate in the same industry with Bloom’s recent revenue growth and margins coming in ahead of FuelCell’s. Considering this, we think that Bloom Energy is currently the better pick of the two stocks.
[1/6/2021] Pick Bloom Energy Over FuelCell Energy To Play The Fuel Cell Space?
The stocks of hydrogen and fuel cell makers fared well last year, driven by increasing interest in clean energy, the recent extension of tax credits for fuel cell projects, and the election of Democrat Joe Biden to the U.S. presidency – who has proposed to spend as much as $2 trillion on fighting climate change. Bloom Energy and FuelCell Energy (NASDAQ: FCEL), two well-known names in the fuel cell market, saw their stock prices soar by 3.5x and 5x, respectively, over 2020. Let’s take a look at the two companies a little more closely to find out which could be the better pick for investors. See our analysis Bloom Energy vs. FuelCell Energy: BE stock looks very undervalued compared to FCEL stock for more details on how the financial and valuation metrics for the two companies compare.
Bloom Energy sells solid oxide fuel cell generators called Bloom Energy Servers which generate electricity from natural gas or biogas via an electrochemical process without combustion. These servers essentially replace diesel generators in commercial and industrial uses and help to cut carbon dioxide pollution by over two-thirds. While FuelCell Energy (NASDAQ: FCEL) also designs and manufactures fuel cells, the company’s focus has been on larger fuel-cell power plants. The company’s systems are bulkier and less flexible compared to Bloom’s.
Bloom’s Revenues have expanded from around $366 million in 2017 to about $758 million over the last 12 months, driven by growing installations of its servers. For instance, with power outages and wildfires in recent years in California, companies started to work with Bloom’s products. FuelCell, on the other hand, has seen its revenue decline from around $96 million to $65 million over the same period, as its product revenues collapsed although it continues to earn revenue from some legacy power generation contracts as well as service and licensing Revenue. Bloom has also reduced its losses, with Operating Margins improving from about -46% to about -17.5% between 2017 and the last 12 months. FuelCell on the other hand has seen its margins deteriorate from -47% to about -85% in the same period.
Now let’s look at the relative valuation of the two companies. FuelCell Energy trades at a much higher price to sales multiple of 40x, compared to about 5x for Bloom. This doesn’t make sense, considering that both companies operating in the same industry with Bloom apparently working with superior technology. Moreover, Bloom has more than doubled its Revenue since 2017, while FuelCell has seen sales decline by about one-third over the same period. Considering this, we think that Bloom Energy is currently the better pick of the two stocks.
[12/11/2020] Stocks To Play The Hydrogen Economy
Interest in clean energy stocks has soared this year, driven by low-interest rates, improving economics, and the election of Democrat Joe Biden – who has proposed to spend as much as $2 trillion on fighting climate change – to the U.S. presidency. While solar and electric vehicle stocks have been the most high profile winners, another theme that appears to have caught investors’ interest is the concept of the “hydrogen economy” or the use of hydrogen as a fuel for transportation and other energy requirements, replacing fossil fuels.
Hydrogen burns much cleaner than petroleum-based fuels and can be produced using just water and energy or from hydrogen-rich gases such as methane. Hydrogen is also seen as a means of storing excess renewable electricity – as the electricity can be used to run a process of electrolysis, which converts water into hydrogen. Our theme of Hydrogen Economy Stocks includes the stocks of U.S. based companies that sell fuel cells, renewable energy equipment, and supply hydrogen gas. Below is a bit more about the companies in our theme and how they fit into the broader picture of the Hydrogen Economy.
Bloom Energy sells solid oxide fuel cell generators called Bloom Energy Servers that use natural gas or biogas as fuel via an electrochemical process without combustion. The company also develops hydrogen fuel cells – that use only hydrogen gas as fuel. The stock is up 245% year-to-date.
FuelCell Energy (NASDAQ: FCEL) is a company that designs and manufactures carbonate and solid oxide fuel cells that run on hydrogen-rich fuels such as natural gas and biogas. The company also operates over 50 fuel cell power plants across the world. The stock is up 229% year-to-date.
Air Products and Chemicals (NYSE: APD), a company that sells gases and chemicals for industrial uses, is one of the world’s largest producers of hydrogen. Earlier this year, the company outlined plans to build a sizable hydrogen plant powered by 4 Gigawatts of renewable electricity in Saudi Arabia. The stock is up 14% year-to-date.
First Solar is the largest U.S.-based solar panel manufacturer. Solar players could also stand to gain from the hydrogen economy as hydrogen can be produced from water by a process of electrolysis, using solar-generated electricity. Solar power typically sees intermittent production and supply-demand mismatches, so excess power could be “stored” in hydrogen. The stock is up 55% year-to-date.
Cummins (NYSE: CMI) – an industrials company best known for its engines and power generation products – has been working on hydrogen-based technologies for almost two decades. The company acquired Hydrogenics, a leading Canadian hydrogen fuel cell player last year. The stock is up 23% year-to-date.
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