Plug Stock: Plug Power (PLUG), a number one maker of hydrogen gasoline cells, is attempting to rebound as momentum in renewable power lifts shares. Is PLUG inventory a purchase proper now?
Latham, N.Y.-based Plug Power provides hydrogen gasoline cells primarily for forklifts in massive warehouses. Its gasoline cells substitute typical batteries in tools and autos powered by electrical energy. Plug Power purchasers embody retail giants Amazon (AMZN), Walmart (WMT), Nike (NKE), and Home Depot (HD). PLUG inventory went public in 2002.
The firm goals to supply greater than half of its hydrogen power from fully renewable sources by 2024. It additionally goals to department out from forklifts to heavy-duty autos to serve ports within the U.S. and Europe, in addition to stationary gasoline cells to energy knowledge facilities and distribution hubs.
Plug Power’s Partnerships
On July 14, Plug Power introduced it was partnering with Charlottesville, Va.-based Apex Clean Energy in a 345 MW wind energy buy settlement and a growth plan to open an inexperienced hydrogen manufacturing facility. The terms of the deal weren’t disclosed. Shares fell 5% following the announcement.
The energy bought via the PPA will instantly provide a brand new hydrogen manufacturing plant with 100% renewable energy, the businesses stated in a press release. The hydrogen plant would be the first and largest wind-supplied hydrogen undertaking within the U.S. and the biggest onshore wind-powered undertaking throughout the globe. Once operational, the plant is anticipated to supply over 30 metric tons per day of fresh liquid hydrogen, sufficient to gasoline the equal of over 2,000 gentle business autos or over 1,000 heavy obligation class 8 vans.
On June 3, Plug and French carmaker Renault stated their Hyvia three-way partnership to make hydrogen-powered vans was beneath approach. The partnership plans to start constructing three kinds of fuel-cell vans at current Renault crops in France by the top of this yr. The three fashions might be primarily based on the Renault Master platform of vans and use the identical electrical motors that now energy the all-electric model of the Master.
The undertaking 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 Power and Chart Industries to determine a non-public fund that gives capital for large-scale, clean-hydrogen infrastructure tasks.
Meanwhile, on Feb. 25, South Korean conglomerate SK Group closed its $1.6 billion funding right into a three-way partnership with Plug Power to broaden hydrogen power 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.
On June 10, Plug Power introduced plans to construct a plant in Camden County, Georgia. The plant will produce 15 tons per day of liquid inexperienced hydrogen meant for gasoline transportation functions, together with materials dealing with and gasoline cell electrical automobile fleets. Plug Power is investing $84 million within the facility, which is to open in 2022.
On March 30, Plug Power stated it deliberate to open an inexperienced hydrogen manufacturing plant in south-central Pennsylvania with Brookfield Renewable Partners. PLUG inventory jumped 11% on the information. Construction is slated for the primary quarter of 2022. The plant is anticipated to be online by late 2022.
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Plug Power Earnings And Fundamental Analysis
On May 14, Plug Power restated 2020 income, including $7.2 million to convey it to an unfavorable $93.2 million. It lowered 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 stated the changes have been non-cash and had no influence on enterprise operations.
On June 22, Plug Power reported blended Q1 outcomes, after twice delaying the report. It posted a 12-cents-a-share loss vs. estimates for an 8-cent loss. It had an income of $72 million, up 76.5% and above views.
Plug Power shipped 1,308 GenDrive items, up 58.5% from a yr in the past.
The firm stated enterprise was impacted by the Texas freeze in February, which brought on a spike in pure gasoline costs inflicting hydrogen costs to leap. Higher freight prices because of pandemic-related congestion at ports additionally added to prices.
Plug Power sees hydrogen costs declining meaningfully within the second half of the yr, with better margins. CEO Marsh stated in an earnings name that lyeed ought to anticipate $115 million to $120 million of gross billings for Q2, about 40% of focused income of $475 million per yr.
Marsh additionally hinted Plug Power was near including a fifth main buyer, which he says might “do over $25 million” within the second half of 2021.
The firm beforehand estimated gross billings of $750 million in 2022 and $1.7 billion in 2024.
RBC Capital Markets on June 30 initiated protection with an outperform ranking and a value goal of 42. It cited massive development potential in the international hydrogen market and Plug’s management place in gasoline cell materials dealing with. It additionally highlighted its alternative to leverage experience into different finish markets together with stationary energy and transportation.
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PLUG Stock Technical Analysis
The inventory gapped up as a lot as 13% to 33.72 after asserting Q1 earnings. Shares are nonetheless effectively beneath their 52-week excessive of 75.49 intraday on Jan. 26.
PLUG inventory plunged on March 16, when the corporate stated it was restating monetary statements. Management cited accounting errors principally associated with noncash objects, 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 May after Ballard Power Systems (BLDP) missed earnings and income estimates and raised doubts in regards to the sector as a complete.
Third Bridge analyst Peter McNally says the accounting error raises a crimson flag.
“While some could view the restatement as backward wanting and easily a matter of accounting guidelines, Plug Power does have future targets that Third Bridge specialists have questioned,” he stated in an earlier electronic mail to IBD.
Plug Power’s relative power line is trending downward. While its RS Rating is 83 out of an attainable 99, its EPS Rating is simply 13. With a Composite Rating of 36, Plug is ranked No. 12 in IBD’s various power business groups.
Fund possession at present stands at 38% as a rising variety of funds are shopping for Plug Power shares. As of June 2021, 866 funds held PLUG inventory, up from 882 in March.
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McNally stated Plug Power is successfully depending on two prospects, which makes the corporate scenario fragile. “In addition, Plug Power just isn’t the one firm on this area that has been in a position to elevate capital, so we anticipate stronger competitors within the years to come back,” he stated.
Rival FuelCell Energy (FCEL) is No. 7 within the group. Ballard Power Systems and Bloom Energy (BE) are additionally gasoline cell shares within the various power business group.
Plug Power is making strides to diversify. On April 29, Plug Power introduced a plan to combine its ProGen gasoline cell engines into BAE Systems’ electrical buses. The two firms will even work on creating hydrogen and refueling infrastructure to end-customers use factors.
Meanwhile, automakers General Motors (GM), Toyota (TM), and Nikola (NKLA) are desperate to embrace hydrogen too.
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Is PLUG Stock A Buy Now?
JPMorgan estimates the general market alternative might exceed $200 billion. Plug Power is elevating capital to finance a bold buildout plan and forging partnerships with key business gamers.
But it has but to show that it will probably obtain profitability. This is probably because of the truth that for now it provides gasoline cells for only one automobile — forklifts. While it has plans to fabricate hydrogen gasoline cells for different industries, a wait-and-see method might be extra prudent.
Moreover, there may very well be a hitch in Plug Power’s plan to construct a plant in southwestern New York. On June 4, the Seneca tribe sued Genesee County Economic Development Center over plans to construct an industrial park that they are saying infringes on their territory. Plug Power is slated to develop into the primary tenant of that park.
Bottom line: PLUG inventory just isn’t a purchase proper now as it’s not in a purchase zone with no discernible sample forming.
Check out IBD Stock Lists and different IBD content material to search out dozens of extra of the finest shares to purchase or watch.
Follow Adelia Cellini Lineker on Twitter @IBD_Adelia.
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