Stock To Watch: Plug Power (PLUG) In Perilous Reversal

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.

Trade-Ideas LLC identified Plug Power ( PLUG) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Plug Power as such a stock due to the following factors:

  • PLUG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $558.4 million.
  • PLUG has traded 13.7 million shares today.
  • PLUG is down 13.3% today.
  • PLUG was up 49% yesterday.

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More details on PLUG:

Plug Power Inc., an alternative energy technology provider, engages in the design, development, commercialization, and manufacture of fuel cell systems for the industrial off-road markets worldwide. Currently there are 2 analysts that rate Plug Power a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Plug Power has been 43.8 million shares per day over the past 30 days. Plug has a market cap of $695.2 million and is part of the technology sector and electronics industry. The stock has a beta of 1.31 and a short float of 39.8% with 0.26 days to cover. Shares are up 267.1% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Plug Power as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and weak operating cash flow.

Highlights from the ratings report include:
  • 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 240.8% when compared to the same quarter one year ago, falling from -$8.47 million to -$28.88 million.
  • Net operating cash flow has significantly decreased to -$8.94 million or 93.52% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • PLUG POWER INC's earnings per share declined by 27.3% in the most recent quarter compared to 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, PLUG POWER INC continued to lose money by earning -$0.79 versus -$0.94 in the prior year. This year, the market expects an improvement in earnings (-$0.09 versus -$0.79).
  • Compared to its closing price of one year ago, PLUG's share price has jumped by 2958.45%, exceeding the performance of the broader market during that same time frame. Regarding the future course of this stock, we feel that the risks involved in investing in PLUG do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • The revenue growth greatly exceeded the industry average of 5.5%. Since the same quarter one year prior, revenues rose by 35.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.

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