Last week, the total return of the S&P 500 was -11.5%. By comparison, Plug Power’s (NASDAQ:PLUG) stock tumbled 22% over the same period. Plug Power is best known for supplying hydrogen fuel cells (HFCs) for forklifts and other material-handling vehicles.
The stock’s staying power is impressive. According to Finviz.com, a total of 139 stocks with market caps of $300 million or above fell more than Plug Power’s shares last week. And not many of those stocks are up more than 42% in 2020, as Plug Power is.
Hydrogen fuel cells are a big deal these days. Plug Power is not the only company that’s benefiting from the interest in alternative fuels and batteries. However, it is one of the best examples of a company that’s been able to commercialize the technology.
That’s why the average annual return of the stock over the last three years is 59%. In that time, Plug Power’s revenues have more than doubled from $85.9 million in 2016 to $191.9 million in the 12 months that ended last September. When the company reports its fourth-quarter results tomorrow, we’ll find out if its revenue continued to grow rapidly at the end of 2019.
In November, I said that Plug Power was worthwhile for speculators as long as it stayed under $3. Despite the stock’s recent correction, it’s still performed very well so far in 2020.
Analysts’ average revenue estimate for the company is $93 million which is nearly 50% above its revenue during the same period a year earlier. Analysts’ mean EPS estimate calls for a loss of 6 cents, versus the company’s loss of 8 cents per share during Q4 of 2018. Over the past four quarters, Plug has only had one earnings beat of 20% or more, and that was in Q2 of 2019.
Should Investors Buy PLUG Stock Before Its Earnings?
Plug Power’s last earnings report was unveiled on Nov. 7 before the markets opened. Analysts, on average, were expecting an 8 cent per share loss. It delivered a loss of 9 cents per share, and its stock fell almost 7% on the news. However, excluding some items, it lost eight cents per share, matching analysts’ average estimate.
As part of its third-quarter report, Plug Power laid out its plans to grow its revenues over the next five years to $1 billion with $170 million in operating income and $200 million in EBITDA, excluding some items. It expects 2019 gross billings of at least $235 million (27% higher than in 2018, which was 42% higher than in 2017) with positive EBITDA, excluding some items.
Plug Power’s first quarter with positive adjusted EBITDA was Q4 of 2018. It’s followed that up with a loss of $6.7 million in Q1 of 2019, a profit of $100,000 in Q2 of 2019, and adjusted EBITDA of $2.5 million in Q3 of 2019.
The company reported its Q2 earnings on Aug. 6. It beat analysts’ average EPS estimate by 20%, and it reiterated its 2019 guidance, but PLUG stock gained just 2 cents or less than 1% on the news.
It seems as though the company’s stock doesn’t move much following its quarterly earnings. That’s true whether they’re negative or positive, which means the decision as to whether to buy the shares before or after the company’s earnings comes down to how committed investors are to Plug’s stock.
The Bottom Line on PLUG Stock
InvestorPlace contributor Louis Navellier recently suggested that Plug Power’s stock is looking unstoppable. As I noted in the beginning of this column, the shares have hung in there despite the recent volatility of the markets.
Therefore, I would have to agree with Navellier’s assessment that the company’s partnership with Lightning Systems is an important milestone.
If the coronavirus from China wasn’t an issue, I’d say Plug’s stock is definitely worth buying now. That’s because the momentum of this stock could get it to double digits by the end of the year. However, the coronavirus is an issue, which makes it tough to handicap any stock.
That said, I don’t expect the company to deliver bad news tomorrow. But those who are interested in buying the shares might want to hold back some of their powder in case the markets undergo another correction like last week.
Plug Power continues to be an excellent speculative play.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.