Why FuelCell Energy (FCEL) Is Down Today

NEW YORK (TheStreet) -- FuelCell Energy  (FCEL) dropped 4.47% to $2.99, down 14 cents from its previous close of $3.13, at the close of the trading day on Thursday in sympathy with peer company Plug Power  (PLUG), which priced a registered offering of 3,902,440 shares of common stock at $5.74 a share.

Plug Power anticipates gross proceeds of approximately $22.4 million from the public offering and net proceeds of approximately $21.5 million. The company intends to use the net proceeds from the sale for working capital and other general corporate purchases such as capital expenditures.

FuelCell amassed a volume of 49,107,707, well above its average of 9,701,980. It hit a low of $2.85 and a high of $3.20 for the day. The stock had risen along with Plug Power's surge throughout the week after the latter company's announced deal with Wal-Mart  (WMT).

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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 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 disappointing return on equity, poor profit margins, weak operating cash flow 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 6.62%. 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.
  • Net operating cash flow has decreased to -$18.77 million or 39.94% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The debt-to-equity ratio of 1.37 is relatively high when compared with the industry average, suggesting a need for better debt level management. 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 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.
  • You can view the full analysis from the report here: FCEL Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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