Why FuelCell Energy Stock Popped 13% on Monday

FuelCell Energy (NASDAQ: FCEL) stock roared ahead 13% through 10:35 a.m. ET Monday after the renewable energy company beat analyst forecasts for the second quarter of 2024.

Heading into the quarter, Wall Street expected FuelCell to lose $0.08 per share on $21.4 million in sales. FuelCell did lose money, but only $0.07 per share. Its sales of $22.4 million likewise exceeded expectations.

FuelCell’s Q2 earnings

Despite investors’ positive reaction, however, FuelCell’s news today was not good.

Sales for the quarter exceeded expectations, but still fell off a cliff, down 41.5% year over year. Earnings per share (which is to say, losses per share) were better than expected, and less than the $0.09 per share FuelCell lost a year ago. But operating losses increased by 15% year over year, to $41.4 million.

The only reason losses per share declined is because FuelCell sold a lot of shares to keep itself solvent. The company’s share count grew roughly 11% in size over the past year, to more than 452 million shares.

Is FuelCell stock a buy?

So why are investors buying FuelCell stock today? Because of the “earnings beat,” obviously. And perhaps also because its CEO played up FuelCell’s relationships with larger energy companies such as ExxonMobil, Ameresco, and South Korea’s Gyeonggi Green Energy, which is buying 42 fuel cell modules from FuelCell for about $160 million.

Problem is, none of these relationships seem to be profitable for FuelCell and, indeed, most analysts who follow the company don’t see FuelCell turning a profit before 2029 at the earliest. With cash levels down to $260 million, debt past $150 million, and FuelCell burning cash at the rate of nearly $20 million per month (according to data from S&P Global Market Intelligence), I expect FuelCell to have more debt than cash six months from now, and needing to sell even more shares to keep itself in business.

But, hey, thanks to the magic of stock dilution, at least that means the losses per share will go down.

Should you invest $1,000 in FuelCell Energy right now?

Before you buy stock in FuelCell Energy, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and FuelCell Energy wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $740,690!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

Story continues

See the 10 stocks »

*Stock Advisor returns as of June 10, 2024

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Why FuelCell Energy Stock Popped 13% on Monday was originally published by The Motley Fool