FuelCell Energy powers up earnings
Posted
Sep 09 2009, 05:20 PM
by
Tobin Smith
Rating:
FuelCell Energy (FCEL), as its name suggests, makes fuel cells for electric power generation. On Tuesday, Sept. 8, the company powered up a third-quarter loss of $15.7 million, or 21 cents per share, compared to a loss of $26.8 million, or 39 cents per share, in the same period a year ago. And while top line revenues fell to $23 million from $27.9 million in the year-ago period, the bottom line earnings of 21 cents per share easily bested Wall Street’s call for a loss of 24 cents per share.
Shares sold off modestly on news of the earnings beat.
But besides the better-than-anticipated bottom line, FuelCell Energy showed me some very encouraging signs that its future looks very bright. This quarter, the company’s big order came in the form of 30.8 megawatts of modules from South Korea’s Posco Power, and my personal favorite, an order from Aircon Energy for a 1.4 megawatt power plant for California’s Sonoma County. Why, you ask, is this my favorite order? Well, because it combines two of my favorite passions: making money in green energy stocks and drinking fine wines made in Sonoma County.
But in all seriousness, the key to FuelCell Energy’s future—as well as the key to a resurgence in challenged FCEL shares—is to keep getting big orders. Another key is for the company to keep producing fuel cells that generate more and more power, and to continue to reduce the cost to produce those units.
Toward that end, FuelCell Energy’s chairman and chief executive, R. Daniel Brdar, said the company is achieving both of the aforementioned crucial objectives. He also said the company continues improving its product cost-to-revenue ratio, which was 1.40 during the quarter, a marked improvement from 1.68 in the same period last year.
I like the track FCEL is on, but I don’t think it’s time yet to pull the trigger and enter the shares right here. I’d like to see a little more power in terms of earnings and share price performance before I put money to work in the stock. But the company is high up on my alternative energy stock watch list.
FuelCell Energy, as well as many other players in the fuel cell and advanced battery space, is discussed in detail in my book, Billion Dollar Green: Profit from the Eco Revolution (John Wiley, 2008). If you want to find out how to make money by adding alternative energy companies to your portfolio, this book is for you.
At the time of this writing, Tobin Smith did not own FCEL shares.
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