NEW YORK (TheStreet) -- FuelCell Energy (FCEL) shares are down 6.17% to $1.90 in trading on Wednesday after the lithium ion fuel cell company's industry rival, Plug Power (PLUG) , reported third quarter earnings that missed analysts expectations.
FuelCell's stock has been tethered to its peer's all year as investors look for signs of maturation in a fuel cell market that could potentially be burgeoning, and after Plug Power said earlier this year that it expects to turn a profit for the first time in its 16 year history.
Plug shares are down after 14.07% to $4.36 the company reported a third quarter EPS net loss of 4 cents per diluted share that was one cent worst that analysts were expecting on revenue of $19.9 million that fell short of analysts' guidance by $4.5 million.
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 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. The company's weaknesses can be seen in multiple areas, such as its poor profit margins, weak operating cash flow and deteriorating net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for FUELCELL ENERGY INC is currently extremely low, coming in at 11.77%. Regardless of FCEL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, FCEL's net profit margin of -16.16% significantly underperformed when compared to the industry average.
- Net operating cash flow has decreased to -$15.92 million or 13.78% when compared to the same quarter last year. Despite a decrease in cash flow FUELCELL ENERGY INC is still fairing well by exceeding its industry average cash flow growth rate of -24.97%.
- The change in net income from the same quarter one year ago has exceeded that of the Electrical Equipment industry average, but is less than that of the S&P 500. The net income has decreased by 24.3% when compared to the same quarter one year ago, dropping from -$5.61 million to -$6.98 million.
- 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 11.3%. Since the same quarter one year prior, revenues fell by 19.6%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
- You can view the full analysis from the report here: FCEL Ratings Report