Today's Perilous Reversal Stock: Fuelcell Energy (FCEL)

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

  • FCEL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $16.4 million.
  • FCEL has traded 5.4 million shares today.
  • FCEL is down 3.1% today.
  • FCEL was up 7.2% yesterday.

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More details on FCEL:

FuelCell Energy, Inc., together with its subsidiaries, designs, manufactures, sells, installs, operates, and services stationary fuel cell power plants for distributed baseload power generation. Currently there is 1 analyst that rates Fuelcell Energy a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Fuelcell Energy has been 6.5 million shares per day over the past 30 days. Fuelcell Energy has a market cap of $616.3 million and is part of the utilities sector and utilities industry. The stock has a beta of 1.93 and a short float of 16.6% with 4.99 days to cover. Shares are up 68.1% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Fuelcell Energy as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and poor profit margins.

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 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 7.5%. 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).

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