Plug Power (PLUG) Stock Falls, Loses Tuesday Gains From Distribution Deal Announcement

NEW YORK (TheStreet) -- Shares of Plug Power  (PLUG) fell 4.11% to $5.13 in late morning trading Wednesday to give up much of the gains it made Tuesday following the fuel cell company's announcement of a long-term hydrogen distribution deal with Praxair  (PX) .

Under the terms of the deal, Plug Power will provide Praxair hydrogen to its U.S. customers that use Plug Power's GenKey hydrogen fuel cell solution, which includes GenDrive fuel cell units, GenFuel hydrogen fuel and infrastructure, and GenCare maintenance service.

"Our agreement with Praxair will enable us to offer the most reliable and economical hydrogen solution to our customers," Plug Power CEO Andy Marsh said in a statement. "Plug Power's emergence in the fueling business will simplify the transition to hydrogen fuel cells for material-handling customers."

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Separately, TheStreet Ratings team rates PLUG POWER INC as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate PLUG POWER INC (PLUG) 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. Among the areas we feel are negative, one of the most important has been weak operating cash flow."

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

  • Net operating cash flow has significantly decreased to -$11.05 million or 120.85% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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, PLUG POWER INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for PLUG POWER INC is currently extremely low, coming in at 3.91%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, PLUG's net profit margin of 22.38% significantly outperformed against the industry.
  • PLUG's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 9.50, which clearly demonstrates the ability to cover short-term cash needs.
  • This stock has increased by 636.06% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.
  • You can view the full analysis from the report here: PLUG Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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