FuelCell Energy (FCEL) reported Q1 results that fell short of Wall Street estimates despite interest in hydrogen fuel cells growing amid the Biden administration’s moves. So, is FuelCell stock a good buy? Take a look at FuelCell’s fundamentals and the FCEL stock chart.
The Danbury, Conn.-based company makes stationary hydrogen fuel cells for commercial and industrial customers as well as utilities.
The cells mix a gaseous form of hydrogen with oxygen to create electrical energy with water as the only byproduct.
But the energy is only as green as its inputs. Hydrogen needs to be stripped from other compounds, like water or natural gas. “Gray” hydrogen accounts for most of the hydrogen produced in the U.S. today. It comes from natural gas and releases carbon emissions during production and processing.
Still, improvements in solar and wind power could ramp up the production of cost-efficient “green” hydrogen.
FuelCell Stock Technical Analysis
FuelCell went public back in 1992 and its stock price had been stuck in the single digits for years. But that changed late last year as the election of Joe Biden as president sent fuel-cell stocks soaring.
Investments in hydrogen fuel cell technology for heavy machinery, large commercial vehicles, and power plants have picked up in the last year, also lifting FCEL stock.
But shares began falling from a peak in February and are now below the key 50-day and 200-day lines. The relative strength line, which tracks performance vs. the S&P 500 index, is also on the downturn. But the stock’s RS Rating is still at 94 out of a best possible 99.
FuelCell has an IBD Composite Rating of just 45 out of a best-possible 99. The key rating combines five other IBD stock ratings. Investors should focus on stocks with a Composite Rating of 90 or higher.
FCEL stock has an Accumulation/Distribution rating of B-, indicating more buying than selling by institutional investors.
FCEL Stock Fundamentals
On March 16, FuelCell reported wider-than-expected losses for the first quarter as revenue also fell short of Wall Street estimates. The backlog decreased as well.
The company has yet to establish a consistent record of profits much less strong profit growth. CAN SLIM guidelines emphasize earnings and sales growth of 25% or more.
Wall Street sees FuelCell posting a loss for this fiscal year and next year, although revenue growth is expected to accelerate to 47% in fiscal 2022 from 12% this year.
FCEL stock has a 49 EPS Rating. Its SMR Rating of D indicates weak sales growth, profit margins, and return on equity ratios.
Investments In Hydrogen Fuel Cells Rise
Interest in hydrogen fuel cells has picked up as the U.S. returned to the Paris Climate Agreement and the Biden administration pushes for investment in greener energy infrastructure.
“I think hydrogen has huge potential going forward in transportation and power generation,” Saudi Aramco CEO Amin Nasser said during a panel at CERAWeek by IHS Markit in March.
Unlike conventional batteries, hydrogen fuel cells don’t need long periods of recharging. That’s critical for power stations, for example, as they can’t go offline for long.
Bloom Energy (BE) is also active in the stationary fuel cell market.
Is FCEL Stock A Buy?
FuelCell Energy shares are not in a buy zone and not forming any type of chart pattern. The stock is also below its key 50-day and 200-day lines.
Bottom line: FCEL stock is not a buy.
Follow Gillian Rich on Twitter for energy news and more.
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