After Earnings Debacle, FuelCell Energy Can Pick Up the Pieces

It feels like just yesterday, but it was actually a few months ago when I implored investors to look past FuelCell Energy’s (NASDAQ:FCEL) underwhelming fiscal first-quarter results. Heck, I even recommended that investors should ignore the haters and stay the course with FCEL stock.

FCEL stock a picture of a fuel cell
Source: Kaca Skokanova/Shutterstock

And now, here we go again. FuelCell Energy released another quarterly report, and the critics are out in full force.

The FCEL stock price dropped in response FuelCell’s fiscal second-quarter data release. Granted, there were some not-so-optimistic data points that might scare some traders away.

But then, with a little bit of digging, maybe we can uncover a reason or two to stay the course. Or better yet, you can add some shares at a highly favorable price point.

A Closer Look at FCEL Stock

The rise and fall of FCEL stock has been nothing less than epic. If you can believe it, as recently as mid-November the stock was trading at $2 and change.

The next thing you know, clean energy mania overtook the stock market. FuelCell Energy traders got caught up in the wave of enthusiasm as the share price climbed higher and higher.

After a relentless rally, FCEL stock topped out at a 52-week high of $29.44 on Feb. 9. The problem with vertical price moves, though, is that they can lead to horrendous crashes.

Thus, FuelCell Energy shares lost significant value over the next several months, finally hitting bottom close to $7 in May.

A comeback might be afoot, but FuelCell’s quarterly data release seems to have thrown a wrench into the works, at least temporarily. FCEL stock is trading at $9.30. This still represents a significant discount compared to February’s peak price.

So, can FuelCell investors find some good news to encourage them to stay in the trade?

Expectation vs. Reality

For now, I’ll tell you that the answer is yes. However, it’s important to acknowledge that FuelCell Energy’s second fiscal quarter 2021 results didn’t meet Wall Street’s expectations.

Analysts surveyed by FactSet expected the company to post $18.9 million in quarterly revenues. However, the actual result was $14 million. That figure also happens to be 26% less than the $18.9 million reported in the year-ago quarter.

Moreover, the analysts were bracing for a net loss of 5 cents per share. Unfortunately, FuelCell Energy reported a quarterly a loss of 6 cents per share.

In addition, the company’s overall backlog decreased by 1.5% during the quarter, to $1.32 billion.

I’m not offering much encouragement here, am I?

At least we got the bad news out of the way. So, where’s the good news?

Big-Time Energy Production

For one thing, as FuelCell Energy President and CEO Jason Few reported, the company added 2.8 megawatts to its generation backlog with a new project in Derby, Connecticut.

Next, FuelCell increased its annualized production rate from 17 megawatts at the end of 2020 to 32 megawatts at the end of April.

Even beyond that, the company is targeting an annualized production rate of 45 megawatts by the end of this fiscal year.

Few further noted that his company is now ISO 45001:2018 certified (the international standard for occupational health and safety) along with already being ISO9001:2015 and ISO14001:2015 certified (for quality management and environmental management).

And let’s not forget about a major development that happened in May. The U.S. Department of Energy awarded FuelCell $8 million in Phase 2 funding to develop the company’s solid oxide platform.

So, there are achievements to celebrate. Some victories are big and some are small, but they all count in the big picture.

The Bottom Line

Hopefully, I’ll have an opportunity to report on FuelCell Energy’s terrific fiscal results in three months.

But until then, we should accept the data that’s on the books and observe that the news isn’t all bad.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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