Plug Power Inc (NASDAQ:PLUG) stock reported earnings before the bell today, and, as I expected, they were horrendous. Shares of the small-cap fuel cell company were off as much as 10% in pre-market trading and have been bouncing up and down since, but remain down steeply from yesterday’s close.
A wildly volatile issue, PLUG stock has traded between about $2.50 and $8.50 over the last year.
Before today’s losses, shares were down nearly 60% in the last 52 weeks as its rapid sales growth failed to translate to the bottom line.
In light of Plug Power delaying its earnings announcement, I wrote an article yesterday predicting that PLUG stock would whiff on consensus estimates. I hate to say I told you so, but, well…
I Told You So
The fuel cell company, which primarily specializes in the industrial off-road market (i.e. forklifts and the like), posted both unflattering sales and net income in the fourth quarter. Analysts expected big-time revenue growth from PLUG stock, calling for $26.3 million in quarterly sales, or a 227% increase from the same quarter a year before.
Instead, PLUG stock posted $21.5 million in revenue — a mere 168% year-over-year jump. Earnings per share also came up way short, with the adjusted loss of 8 cents per share doubling the expected 4-cent deficit.
Honestly, the market shouldn’t be surprised.
The reason I expected PLUG stock to miss on earnings today isn’t because I’m a stock market savant. (That has nothing to do with it.) It’s because Plug Power decided to postpone its earnings announcement by a couple of weeks. As it turns out, that’s historically bad news for earnings. I pointed out this phenomenon in my article yesterday:
“…the most ominous sign that the PLUG stock price could take a nasty hit on Tuesday is the company’s decision to delay its 10-K filing.”
The SEC filing announcing the delay cited
“unforeseen delays in collecting, compiling and finalizing certain financial and other related data necessary to complete the Report, particularly data relating to a substantially higher level of complex customer transactions.”
OK, in and of itself this statement is weird. It seems to concede, by my interpretation at least, that the company’s accountants aren’t the sharpest tools in the shed.
That’s bad enough, but what really doomed PLUG stock wasn’t the contents of the late filing announcement. It was the simple fact that there was a late filing announcement:
“Historically speaking, this doesn’t bode well for PLUG stock. An academic study conducted by business professors at NYU and Rutgers shows that companies that delay their earnings announcements end up missing earnings estimates 55% of the time.”
Plug Power stock didn’t have to tumble today. Wall Street should’ve sharply revised its estimates down as soon as the company announced its late filing. Instead, PLUG stock — is tumbling today along with fellow small-cap fuel cell stocks Ballard Power Systems Inc. (USA) (NASDAQ:BLDP) and FuelCell Energy Inc (NASDAQ:FCEL).
Whether you’re feeling the pain from PLUG stock’s fall, sitting on the sidelines, or merrily shorting it on its way down, the lesson is the same: Head for the hills the instant a company postpones its report date.
As of this writing John Divine held no positions in any of the stocks mentioned. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
