Plug Power (PLUG) Pops While FuelCell (FCEL) Drops

NEW YORK (TheStreet) -- Plug Power (PLUG) was popping during Wednesday's trading session, while FuelCell (FCEL) was dropping.

Plug Power has continued its upward march sparked by a Jan. 2 announcement detailing its fourth-quarter orders. Last week, the small-cap was soaring after exceeding expectations with its fourth-quarter orders. The company said it met its fourth-quarter 2013 order targets, totaling approximately $32 million and including contracts with Walmart (WMT), Kroger (KR), and Procter & Gamble (PG).

"Plug Power has seen significant traction closing out 2013, and we expect the first quarter of 2014 bookings to meet or exceed the fourth quarter of 2013," said CEO Andy Marsh in a statement.

The Latham, NY-based business will report full fourth-quarter figures on Jan. 14.

By early afternoon, Plug Power had soared 20.2% to $4.63, adding to an incredible 178.3% increase since the beginning of the year, a mere four-and-a-half trading sessions ago.

Competitor FuelCell Energy, meanwhile, is booking losses after being pulled sharply higher a day earlier. The stock has dropped 6.7% to $1.73 after climbing 15.2% over Tuesday, a result of increasing investor appetite for alternative fuel cell companies.

TheStreet Ratings team rates PLUG POWER INC as a Sell with a ratings score of D-. The 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, underperformed when compared the industry average of 10.1%. 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 cash flow growth rate is still lower than the industry average growth rate of 19.53%.

TheStreet Ratings team rates FUELCELL ENERGY INC as a Sell with a ratings score of D-. The team has this to say about their recommendation:

"We rate FUELCELL ENERGY INC (FCEL) a SELL. This is driven by a few notable 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 disappointing return on equity, poor profit margins and generally high debt management risk."

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

  • 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, FUELCELL ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for FUELCELL ENERGY INC is currently extremely low, coming in at 4.71%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -17.58% is significantly below that of the industry average.
  • Currently the debt-to-equity ratio of 1.54 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, FCEL's quick ratio is somewhat strong at 1.15, demonstrating the ability to handle short-term liquidity needs.
  • The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Electrical Equipment industry average. The net income increased by 14.4% when compared to the same quarter one year prior, going from -$11.34 million to -$9.70 million.
  • Investors have driven up the company's shares by 52.85% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the future course of this stock, we feel that the risks involved in investing in FCEL do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

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