FuelCell Energy: Is It a Buy?

FuelCell Energy (FCEL) announced third quarter ended July 31, 2016 total revenue of $21.7 million, down 48 percent year-over-year from $41.4 million during the same period last year.

A weak performance

FuelCell Energy declared third quarter of 2016 net loss of $11.8 million or $0.38 of loss per diluted share compared to a net loss of $7.3 million or $0.29 per diluted share in third quarter of 2015.

The global fuelcell manufacturing company reported continued year-over-year decline in both its top and bottom lines primarily due to weaker sales and sales mix related to Asian sales as against full power plant sales.

FuelCell Energy is maintaining a strong financial position with net cash and financing accessibility of $179 million driven by the latest capital raising efforts such as the strategic asset divestment program to attractively support project growth plans.
The company has also consistently lowered its consolidated backlog over the quarters with about $392 million of net backlog by the end of third quarter of 2016.

FuelCell Energy has uniquely financed a second project under the strategic PNC Energy Capital generation facility, generating approximately $9 million in cash during the fourth quarter of 2016.
FuelCell Energy: Is It a Buy?
Image by Comfreak / Pixabay
Moving ahead, FuelCell Energy expects to commission, finance and sell two extra PPA projects with an expectation of sequential revenue expansion during the fourth quarter of 2016.

The company recently declared the strategic commencement of its operations and funding program of a key Wastewater Power project that includes the renewable biogas processing facility. This turnkey power solutions project is expected to deliver significant cost savings with improved energy resiliency and reasonable on-site power.

Some positives

FuelCell Energy is consistently expanding the work-in-process, complete plants, short-term project assets and long-term project assets while strategically minimizing the quarterly backlog and converted into cash which is in line with its continued commitment to deliver superior long-term growth while offering attractive shareholder returns.

The global energy generation and distribution company recently declared the growth of a power project that is utility driven to demonstrate the company’s industry-leading electrical efficiency generation capability that allows utilities to cleanly and reasonably solve major power generation obstacles in land-restricted regions. The development of a 3 MW fuel cell key power plant located in Danbury, Connecticut is estimated to begin in the near future after the council approval.

FuelCell Energy is expected to develop and deliver outstanding power generation project at a scale for distributed generation. This affordable and ultra-clean sizeable power project is expected to have nearly 60% strategic electrical efficiency, avoiding power losses in transmission lines. The development of this 3.7 MW key fuel cell power plant in the US is believed to commence by the end of fiscal year 2016.

The solid project development pipeline of FuelCell Energy highlights superior company’s confidence in its long-term growth prospects with an expectation of slow but, consistent improvement in the global clean energy demand.

Moving ahead, the hydrogen depended alternative fuels have significant growth potential being supported by strategic latest advancements and investment funding which is expected to drive huge demand for FuelCells to generate clean power through hydrogen fuel.

Conclusion

Overall, the investors are advised to “Sell” any equity held in FuelCell Energy Inc. considering the company’s weaker near-term and longer term growth prospects with PEG ratio of -0.21, indicating no growth but decline. The profit margin of -34.72% is also disappointing and signifies no profit but loss. However, the company has a solid financial position with notable total cash of $94.15 million and smaller total debt position of $66.11 million.
Published on Sep 15, 2016
By Yaggyaseni Mittra

Copyrighted 2016. Content published with author's permission.

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