Categories Analysis, Energy

FuelCell Energy (FCEL) stock rebounds on growth prospects

FuelCell Energy Inc. (NASDAQ: FCEL) stock rebounded over 308% in the past month and over 593% in the past three months ahead of Q4 earnings results. The investors turned positive about the company’s future growth after the completion of the restructuring phase of transformation. The shares have risen over 205% in the past six months while it has fallen over 67% in the past year.

The company, which sells stationary fuel cell power plants for distributed power generation, has remained the favorite and highly speculative play of both the traders and investors. The stock has turned out to be an expensive trading vehicle and the recent run has caused the market capitalization to expand to $433 million.

power plant
Image for representation. Courtesy: Johannes Plenio on Unsplash

In the June-end 2019, the company has fallen to the verge of bankruptcy because of the danger of tripping debt covenants. However, the stock recovered from the 27-year low as the company got access to much-needed capital to wipe out old debts and fulfill its backlog. The company has shown an impressive turnaround to the hottest speculative play in renewable energy.

Meanwhile, FuelCell will provide strategic updates and its fourth-quarter earnings results on January 14 before the market opens. It is expected that the company could provide additional details about the liquidity and cash flow generation. The transformation efforts have given confidence for the company to deliver on current project commitments at a lower cost and successfully scale to meet future growth needs.

Analysts expect the company to report a loss of $0.11 per share on revenue of $11.51 million for the fourth quarter. In comparison, during the previous year quarter, the company posted a loss of $2.28 per share on revenue of $17.88 million. The company has missed analysts’ expectations thrice in the past four quarters. Most of the analysts recommended a “strong-buy” or “buy” rating with an average price target of $0.75.

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For the third quarter, FuelCell reported a narrower loss helped by lower costs and expenses as well as an 88% jump in revenues. The top-line growth was driven by the ExxonMobil license agreement and an increase in Generation revenues related to the Bridgeport Fuel Cell Project.

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The restructuring initiatives and resources being allocated to funded Advanced Technologies projects aided in a reduction in spending. However, the company incurred higher legal and professional fees related to the company’s on-going restructuring and refinancing initiatives.

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