Could fuelcell energy increase this year?

FuelCell Energy (NASDAQ:FCEL) Along with other stocks in the industrial sector was sold recently following the news that US Senate will not sponsor any package Which will initiate new spending to tackle climate change. Since then, the stock is currently up 2.34%, so some investors have wondered whether the company has been able to build new ground and propel the charts to new highs this year. This article will examine the forces acting in the company’s favor, as well as consider some of the warning signs.


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growth prospects

Despite the short-term sell-off, FCEL has been performing strongly in terms of revenues on an annualized and FWD basis. The company currently has a revenue growth of 37.76% year-on-year, while the sector is struggling at 17.74%. However, its FWD revenue estimate is less optimistic, as it stands at 28.86% compared to 10.62%.
Apart from increasing the company’s revenue, FCEL executives have also made major strategic investments which are reflected in the company’s working capital and capex growth. These figures are also growing faster than the industry median. The company’s capex growth is 98.42% while the sector is 29.19%.
Although FCEL has strong growth prospects, several analysts have revised their expectations for the stock in the past three months. The company has got 1 EPS down revision and 7 revenue down revision. It currently has 11 analysts covering the last 90 days with a consensus hold rating, 9 analysts rated this rating and 1 sell rating, and 1 strong sell rating.

Struggling with profitability and margin

FCEL is reportedly having a hard time turning its business profitable, which can partly be explained by its large investment in CAPEX for further profits down the line. The company’s Gross Profit Margin TTM is -14.02% while the Sector’s Positive Margin is 29.59%. After removing expenses, its EBITDA margin is currently deteriorating significantly compared to the sector mean as it stands at -90.67%, and the sector margin stands at 12.98%.
The company’s poor performance on this front has resulted in substantial loss of value to the company as compared to the previous year. It is currently down -39.35%, which is more than the sector’s loss of -14.18%. In the long run, FCEL is struggling to keep pace with the broader market or even make a profit. Over the past five years, the company’s return to shareholders has decreased by 80.29%, while the S&P 500 has delivered a return of 68.08%.

Evaluation

The valuation of FCEL on value/sales basis is more expensive than some of its peers in the industrial sector. FCEL has a P/S ratio of 15.26, while Wallbox (NYSE: WBX) stands at 12.92, and Stem (NYSE:STEM) The ratio is 5.15. Some ratios of FCEL are relatively better than others in this sector like its price/book which is 2.56 to 2.10 of the sector.
A big reason the company’s valuation ratio is relatively high compared to its competitors is that its sales per share have declined significantly since 2014, when it once stood at $146.93 per share. This figure has dropped to $0.25 today.