Plug Energy (PLUG), a number one maker of hydrogen gasoline cells, is making an attempt to rebound as momentum in renewable vitality lifts shares. Is PLUG inventory a purchase proper now?
Latham, N.Y.-based Plug Energy provides hydrogen gasoline cells primarily for forklifts in massive warehouses. Its gasoline cells substitute standard batteries in tools and automobiles powered by electrical energy. Plug Energy shoppers embrace retail giants Amazon (AMZN), Walmart (WMT), Nike (NKE) and House Depot (HD). PLUG inventory went public in 2002.
The corporate goals to provide greater than half of its hydrogen vitality from solely renewable sources by 2024. It additionally goals to department out from forklifts to heavy-duty automobiles to serve ports within the U.S. and Europe, in addition to stationary gasoline cells to energy information facilities and distribution hubs.
Plug Energy stands to learn from a trillion-dollar infrastructure invoice that’s headed for a vote within the Home on Sept. 27. The package deal contains $8 billion for hydrogen tasks.
Plug Energy’s Partnerships
On July 14, Plug Energy introduced it was partnering with Charlottesville, Va.-based Apex Clear Vitality in a 345 MW wind energy buy settlement and a growth plan to open a inexperienced hydrogen manufacturing facility. Phrases of the deal weren’t disclosed. Shares fell 5% following the announcement.
The facility bought by means of the PPA will instantly provide a brand new hydrogen manufacturing plant with 100% renewable energy, the businesses mentioned in a press release. The hydrogen plant would be the first and largest wind-supplied hydrogen challenge within the U.S. and the most important onshore wind-powered challenge throughout the globe. As soon as operational, the plant is anticipated to provide over 30 metric tons per day of fresh liquid hydrogen, sufficient to gasoline the equal of over 2,000 mild business automobiles or over 1,000 heavy obligation class 8 vans.
On June 3, Plug and French carmaker Renault mentioned their Hyvia three way partnership to make hydrogen-powered vans was underneath means. The partnership plans to start constructing three sorts of fuel-cell vans at present Renault vegetation in France by the tip of this yr. The three fashions can be primarily based on the Renault Grasp platform of vans and use the identical electrical motors that now energy the all-electric model of the Grasp.
The challenge additionally contains the set up of hydrogen charging stations throughout Europe, provide of carbon-free hydrogen in addition to upkeep and administration of fleets.
In April, oilfield provider Baker Hughes (BHI) joined Plug Energy and Chart Industries to determine a non-public fund that gives capital for large-scale, clean-hydrogen infrastructure tasks.
In the meantime, on Feb. 25, South Korean conglomerate SK Group closed its $1.6 billion funding right into a three way partnership with Plug Energy to broaden hydrogen vitality in Asia. The three way partnership ought to launch this yr.
The partnership will present hydrogen gasoline cell techniques, hydrogen fueling stations and electrolyzers to South Korea and different Asian markets.
Airbus, Phillips 66 Partnerships
On Oct. 13, Plug Energy mentioned it was teaming up with plane maker Airbus to look into the feasibility of a hydrogen-powered airplane. It additionally introduced a plan to discover methods to deploy Plug Energy’s hydrogen know-how inside oil refiner Phillips 66 operations. Plug inventory gapped up 12% on the partnership information.
The bulletins come forward of Plug Energy’s investor day occasion on Oct. 14. Wall Avenue is in search of the corporate to share potentialities for brand new income streams and extra buyer bulletins.
Plug Energy introduced on Sept. 20 it might open a manufacturing facility in Fresno County, Calif. As the most important of its type, the plant will produce 30 metric tons of liquid inexperienced hydrogen per day. The plant will serve the West Coast of the U.S., in addition to Vancouver, B.C., in Canada. Plug expects to interrupt floor for the challenge in 2023 and open the ability in 2024.
Plug introduced on Sept. 14 that it is increasing operations with a European headquarters in Germany. The 70,000-square foot facility will home an innovation middle with engineering labs and technical helps, amongst different options. The power is anticipated to open at the beginning of 2022.
On Aug. 10, Plug Energy mentioned it broke floor on its $84 million plant in Camden County, Georgia. The plant will produce 15 tons per day of liquid inexperienced hydrogen supposed to gasoline transportation purposes, together with materials dealing with and gasoline cell electrical car fleets. The plant is anticipated to open in 2022.
On March 30, Plug Energy mentioned it deliberate to open a inexperienced hydrogen manufacturing plant in south-central Pennsylvania with Brookfield Renewable Companions. PLUG inventory jumped 11% on the information. Building is slated for the primary quarter of 2022. The plant is anticipated to be on-line by late 2022.
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Plug Energy Earnings And Elementary Evaluation
On Could 14, Plug Energy restated 2020 income, including $7.2 million to carry it to adverse $93.2 million. It diminished 2019 income by about $300,000 and 2018 income by about $400,000. In 2020 losses widened by 10 cents a share to $1.68, whereas 2019 per-share losses remained unchanged and 2018 losses widened by 3 cents a share.
CEO Andy Marsh mentioned the changes have been non-cash and had no influence on enterprise operations.
On Aug. 6, Plug Energy reported blended Q2 outcomes. It had a lack of 18 cents per share on income of $124.6 million.
Gross billings rose to $126 million from $75 million within the year-ago quarter. Plug Energy expects gross billings to achieve $750 in 2022.
Plug Energy mentioned the outcomes included authorized and accounting prices referring to the restatement of beforehand points monetary statements.
Wall Avenue had anticipated a 7-cent loss on gross sales of $113.8 million.
Third Bridge analyst Peter McNally says Plug Energy’s file income and powerful orders “show the corporate has deliverable merchandise that meet buyer wants each at the moment and within the close to future.”
Nevertheless, McNally cautions that value inflation is a priority for Plug Energy and the trade as an entire.
“This can be a drag on profitability not simply within the present outcomes — prices grew quicker than revenues — but additionally sooner or later as the corporate builds out new capabilities. Plug Energy’s partnership mannequin ought to mitigate the influence of inflation.”
Plug Energy sees hydrogen costs declining meaningfully within the second half of the yr, enhancing margins. Marsh has additionally hinted Plug Energy was near including a fifth main buyer, which he says may “do over $25 million” within the second half of 2021.
The corporate beforehand estimated gross billings of $750 million in 2022 and $1.7 billion in 2024.
On July 23, Citigroup initiated protection on Plug with a Purchase ranking and a worth goal of $35. Analyst P.J. Juvekar mentioned Plug Energy is “main the way in which” within the nascent hydrogen financial system, which is “on the cusp of a breakout.”
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PLUG Inventory Technical Evaluation
The inventory fell 0.38% to 25.90 after saying Q2 earnings. However shares rebounded 7.8% to 27.91 on the following buying and selling day, Aug. 9, Shares are nonetheless nicely beneath their 52-week excessive of 75.49 intraday on Jan. 26.
PLUG inventory plunged on March 16, when the corporate mentioned it was restating monetary statements. Administration cited accounting errors principally associated to noncash gadgets, together with the way it categorized some prices. Shares jumped after releasing the restated financials.
PLUG inventory together with different fuel-cell friends have been dragged down additional in early Could, after Ballard Energy Methods (BLDP) missed earnings and income estimates and raised doubts concerning the sector as an entire.
McNally says the accounting error raises a pink flag.
“Whereas some might view the restatement as backwards wanting and easily a matter of accounting guidelines, Plug Energy does have future targets that Third Bridge consultants have questioned,” he mentioned in an earlier electronic mail to IBD.
Plug Energy’s relative power line shot up in latest days on optimistic information about partnerships. Its RS Ranking is 61 out of a doable 99, beneath the 80 and up IBD recommends. Its EPS Ranking is simply 7. With a Composite Ranking of 39, Plug is ranked No. 15 in IBD’s various vitality trade group.
Fund possession presently stands at 36%. As of September 2021, 896 funds held PLUG inventory, down from 912 in June.
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McNally mentioned Plug Energy is successfully depending on two prospects, which makes the corporate’s state of affairs fragile. “As well as, Plug Energy is just not the one firm on this house that has been in a position to elevate capital, so we count on stronger competitors within the years to return,” he mentioned.
Rival FuelCell Vitality (FCEL) and Ballard Energy Methods and Bloom Vitality (BE) are additionally gasoline cell shares within the various vitality trade group.
Plug Energy is making strides to diversify. On April 29, Plug Energy introduced a plan to combine its ProGen gasoline cell engines into BAE Methods’ electrical buses. The 2 firms may also work on growing hydrogen and refueling infrastructure to end-customers use factors.
In the meantime, automakers Basic Motors (GM), Toyota (TM) and Nikola (NKLA) are desperate to embrace hydrogen too.
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Is PLUG Inventory A Purchase Now?
JPMorgan estimates the general market alternative may exceed $200 billion. Plug Energy is elevating capital to finance an bold buildout plan and forging partnerships with key trade gamers.
But it surely has but to show that it might obtain profitability. That is maybe as a result of the truth that for now it provides gasoline cells for only one car — forklifts. Whereas it has plans to fabricate hydrogen gasoline cells for different industries, a wait-and-see strategy might be extra prudent.
Furthermore, there might be a hitch in Plug Energy’s plan to construct a plant in southwestern New York. On June 4, the Seneca tribe sued Genesee County Financial Growth Middle over plans to construct an industrial park that they are saying infringes on their territory. Plug Energy’s is slated to grow to be the primary tenant of that park.
Backside line: PLUG inventory is just not a purchase proper now as it isn’t in a purchase zone with no discernible sample forming.
Take a look at IBD Inventory Lists and different IBD content material to search out dozens extra of the finest shares to purchase or watch.
Observe Adelia Cellini Linecker on Twitter @IBD_Adelia.
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