NEW YORK (TheStreet) -- Shares of FuelCell Energy Inc. (FCEL - Get Report) are higher by 5.09% to $2.48 on heavy volume in mid-morning trading on Thursday, after the company announced it entered into a strategic financing agreement with NRG Energy Inc. (NRG - Get Report).
Under the terms of the agreement NGR Energy will purchase 14.6 million shares of FuelCell's common stock for $2.39 per share, or $35 million, claiming a 6% stake in the company.
In exchange NRG will establish a new $40 million revolving construction and term loan facility for FuelCell to use for project development, the company said.
"These agreements strengthen the Company's liquidity position and are expected to accelerate deployment of multi-megawatt fuel cell projects in the U.S.," said FuelCell CEO Chip Bottone.
Shares of NRG Energy are down by -0.06% to $30.80 this morning.
Separately, TheStreet Ratings team rates FUELCELL ENERGY INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
"We rate FUELCELL ENERGY INC (FCEL) a SELL. This is driven by multiple weaknesses, 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 poor profit margins."
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 115.1% when compared to the same quarter one year ago, falling from -$7.37 million to -$15.84 million.
- The gross profit margin for FUELCELL ENERGY INC is currently extremely low, coming in at 7.11%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -41.39% is significantly below that of the industry average.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Electrical Equipment industry and the overall market, FUELCELL ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- FCEL, with its decline in revenue, slightly underperformed the industry average of 6.0%. Since the same quarter one year prior, revenues slightly dropped by 9.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- FUELCELL ENERGY INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FUELCELL ENERGY INC continued to lose money by earning -$0.20 versus -$0.24 in the prior year. This year, the market expects an improvement in earnings (-$0.14 versus -$0.20).
- You can view the full analysis from the report here: FCEL Ratings Report