On March 5, investors in shares of Plug Power (NASDAQ:PLUG) stock had a bit of a challenging time. That was the release of the company’s fourth-quarter earnings report, and it was clear that the investing community didn’t like what they saw. The share price fell nearly 5% on the news, and is currently down more than 34% since that day.
As investors, we don’t always have to accept post-earnings reactions at face value. And in this instance, Plug stock is an example of an overreaction.
When that happens to a perfectly good company, prospective investors can put the stock on their watch list and even start to accumulate shares if they’re ready and able to do so.
That said, let’s take a look at Plug Power stock to see why it is still one for investors to keep their eye on.
Just a Hiccup for PLUG Stock
I’d like to begin with a nod to InvestorPlace contributor Nicolas Chahine. He used a very apt phrase and constructed a cogent argument in favor of PLUG stock, saying the post-earnings share-price decline is “a hiccup in the middle of a positive trend.”
Within a matter of days from that article publishing, though, the share price was down nearly 25%. That might not feel like a “hiccup” to folks who already owned the stock. But if they look at the big picture, there’s no reason to panic. After all, the share price is still up considerably since late 2018, when the stock was trading at around $1.
Besides, there are other factors at play and they’re not Plug Power’s fault. The coronavirus from China has put downward pressure on much of the market, and clean-energy products are no exception. Moreover, there’s been a collapse in the crude-oil price. It might seem counterintuitive, but a sharp oil-price decline will not only impact fossil-fuel companies. It also adversely affects alternative-energy sector stocks.
Moreover, keep in mind that the stock price had rocketed from around $1 to more than $5.50 in a relatively short time. It’s not unusual for external, uncontrollable factors to cause some price retracement after a run-up of that magnitude. It doesn’t mean that planet-sustaining products aren’t in demand anymore. And if the oil price recovers, and/or a coronavirus vaccine is developed soon, the PLUG stock price could rebound sharply.
Breaking Down Plug Power’s “Bad” Quarter
Traders apparently sank Plug Power’s share price because during the fourth quarter, the company posted a net loss of $18.3 million. However, it should be noted that Plug Power’s quarterly adjusted loss per share of $0.06 was no worse than the Wall Street consensus estimate, which was also $0.06.
Evidently traders also didn’t like that the quarterly revenue of $91.7 million was less than the $93 million consensus estimate. However, that $91.7 million still represents a very sizable 53% increase.
Moreover, Plug Power’s quarterly gross billings of $94.5 million indicate an increase of 52%. And the company’s full-year billings came out to $236.8 million, an increase of 28%. Plug Power also projects that in 2020, the company will attain $300 million in gross billings. That would be 27% higher than the company’s gross billings from last year.
These are highly encouraging figures. Plug Power chief executive Andy Marsh came to the very reasonable conclusion that the company has “never been in a better position.” The company and its customers currently use around 24 tons of hydrogen a day, but Marsh projects that that number will increase to 85 tons per day by 2024. If that pans out, Marsh’s vision of building a “hydrogen economy” could come to fruition.
The Final Word on PLUG Stock
My “A” rating on PLUG stock reflects a willingness to look past traders’ negative reaction to the company’s recent earnings report. That report contained some highly encouraging numbers, and Andy Marsh’s ambitious vision should add considerable shareholder value for this forward-thinking company.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
