Categories Analysis, Technology

Does Plug Power offer a buying opportunity after accounting restatement?

Lack of visibility into profitability and the continuing weakness in the core Materials Handling business remain a concern

Last week, Plug Power Inc. (NASDAQ: PLUG) restated its historical financial statements, eliciting mixed reactions from the market. The clean energy company is considered a pandemic winner but its recent performance has been volatile. The financial statements for fiscal years 2018, 2019, and 2020 were restated to rectify accounting errors related to the impairment of certain long-lived assets and loss accrual for service contracts.

Cash Unaffected

Bringing relief to shareholders, the New York-based provider of hydrogen fuel cell solutions ruled out any potential impact to its cash position and business operations from the accounting error, though the restatement affected gross margins for the years under review. Earlier, a preliminary update on the restatement had triggered a stock sell-off.

FuelCell Energy Q1 2021 Earnings Call Transcript

The steady rise in gross billings and the strong pipeline indicate that the company’s fundamentals remain strong. The long-term prospects of the stock look bright and the impressive target price supports the bullish view. PLUG can continue benefiting from the present tailwinds, which makes it an attractive but slightly risky investment. However, there is hardly any visibility into the elusive profitability, amid continuing weakness in the core Materials Handling business. The stock is trading sharply below the all-time highs of 2000.

Gross Billings Intact

Plug Power in a recent statement said it has around $5 billion of cash, which the company intends to use for investing in growth initiatives. It also reiterated the annual gross billing targets of $475 million and $750 million for 2021 and 2022, respectively. Underscoring the effectiveness of the business model, it continues to ink strategic partnerships with renewable energy firms, like the recent tie-ups with BAE Systems and Chart Industries. A year ago, the company acquired United Hydrogen and Giner ELX as part of its efforts to become a top player in the green hydrogen economy.

Continuing the losing streak, Plug Power reported a loss of $1.12 per share for the fourth quarter as revenues slipped into the negative territory hurt by one-time costs. The bottom line also missed the estimates, as it did in the previous quarter. Meanwhile, gross billings rose to $96.3 million.

Defers Q1 Report

The company will likely unveil its first-quarter numbers on May 27 before the opening bell amid expectations of loss narrowing to $0.08 per share. The report, originally scheduled for an earlier date, was postponed in view of the financial restatement. The management estimates that gross billings grew about 60% year-over-year to $70 million in the March quarter and revenues rose to about $67 million.

Read management/analsys’ comments on quarterly reports

After languishing in the single-digit territory for more than a decade, the stock entered the recovery path last year and climbed to a multi-year high in January. However, the trend reversed since then and the shares started shedding the gains. They have lost about 23% since the beginning of the year.


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