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Why Plug (PLUG) Fell Hard Today

NEW YORK (TheStreet) -- Plug Power (PLUG) had a rough day today, plummeting 16.12% to end the week at $6.71. The news that two different research firms downgraded Plug hit hard, sending the stock into a downward spiral.

Roth Capital downgraded the hydrogen fuel cell maker to "neutral" from "buy". Even though the company's bookings look set to keep growing, it posted losses of $28.9 million in its fiscal fourth quarter, compared to an $8.5 million loss in the prior year's quarter.

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Roth Capital also warned that shipments of the fuel cells could be delayed due to the company's customers lacking the hydrogen infrastructure needed to utilize Plug's fuel cells. The research firm added that building the infrastructure could take some time, which would further hurt sales.

Plug Power CEO Andy Marsh says that he expects the company to break even by the third quarter this year and be profitable for the first time in the fourth quarter of 2014.

In the short term the company plans to focus on switching forklifts over to the cheaper and quicker charging hydrogen fuel cells. Future endeavors include placing fuel cells in ground support equipment at airports; replacing noisy and expensive diesel powered refrigeration units in food delivery trucks with their quieter fuel cells, as well as range extenders for electric delivery trucks.

TheStreet Ratings team rates PLUG POWER INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

"We rate PLUG POWER INC (PLUG) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Electrical Equipment industry. The net income has significantly decreased by 54.0% when compared to the same quarter one year ago, falling from -$10.33 million to -$15.90 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Electrical Equipment industry and the overall market, PLUG POWER INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • PLUG, with its decline in revenue, slightly underperformed the industry average of 5.8%. Since the same quarter one year prior, revenues slightly dropped by 3.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • PLUG's debt-to-equity ratio of 0.85 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.21 is sturdy.
  • Net operating cash flow has slightly increased to -$7.01 million or 1.82% when compared to the same quarter last year. Despite an increase in cash flow, PLUG POWER INC's average is still marginally south of the industry average growth rate of 2.38%.
  • You can view the full analysis from the report here: PLUG Ratings Report
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