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Is PLUG Inventory A Purchase As Plug Energy Plans New Plant On West Coast?


Plug Energy (PLUG), a number one maker of hydrogen gasoline cells, is making an attempt to rebound as momentum in renewable vitality lifts shares. Is PLUG inventory a purchase proper now?




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Latham, N.Y.-based Plug Energy provides hydrogen gasoline cells primarily for forklifts in massive warehouses. Its gasoline cells substitute typical batteries in gear and automobiles powered by electrical energy. Plug Energy shoppers embody retail giants Amazon (AMZN), Walmart (WMT), Nike (NKE) and House Depot (HD). PLUG inventory went public in 2002.

The corporate goals to supply greater than half of its hydrogen vitality from completely renewable sources by 2024. It additionally goals to department out from forklifts to heavy-duty automobiles to serve ports within the U.S. and Europe, in addition to stationary gasoline cells to energy information facilities and distribution hubs.

Plug Energy stands to profit from a trillion-dollar infrastructure invoice that’s headed for a vote within the Home on Sept. 27. The package deal contains $8 billion for hydrogen tasks.

Plug Energy’s Partnerships

On July 14, Plug Energy introduced it was partnering with Charlottesville, Va.-based Apex Clear Vitality in a 345 MW wind energy buy settlement and a growth plan to open a inexperienced hydrogen manufacturing facility. Phrases of the deal weren’t disclosed. Shares fell 5% following the announcement.

The ability bought via the PPA will straight provide a brand new hydrogen manufacturing plant with 100% renewable energy, the businesses stated in a statement. The hydrogen plant would be the first and largest wind-supplied hydrogen venture within the U.S. and the biggest onshore wind-powered venture throughout the globe. As soon as operational, the plant is predicted to supply over 30 metric tons per day of unpolluted liquid hydrogen, sufficient to gasoline the equal of over 2,000 gentle industrial automobiles or over 1,000 heavy responsibility class 8 vans.

On June 3, Plug and French carmaker Renault stated their Hyvia three way partnership to make hydrogen-powered vans was below means. The partnership plans to start constructing three varieties of fuel-cell vans at present Renault vegetation in France by the top of this yr. The three fashions will probably be primarily based on the Renault Grasp platform of vans and use the identical electrical motors that now energy the all-electric model of the Grasp.

The venture additionally contains the set up of hydrogen charging stations throughout Europe, provide of carbon-free hydrogen in addition to upkeep and administration of fleets.

In April, oilfield provider Baker Hughes (BHI) joined Plug Energy and Chart Industries to ascertain a non-public fund that gives capital for large-scale, clean-hydrogen infrastructure tasks.

In the meantime, on Feb. 25,  South Korean conglomerate SK Group closed its $1.6 billion funding right into a three way partnership with Plug Energy to increase hydrogen vitality in Asia. The three way partnership ought to launch this yr.

The partnership will present hydrogen gasoline cell programs, hydrogen fueling stations and electrolyzers to South Korea and different Asian markets.

Increasing Footprint

Plug Energy introduced on Sept. 20 it will open a manufacturing facility in Fresno County, Calif. As the biggest of its sort, the plant will produce 30 metric tons of liquid inexperienced hydrogen per day. The plant will serve the West Coast of the U.S., in addition to Vancouver, B.C., in Canada. Plug expects to interrupt floor for the venture in 2023 and open the ability in 2024.

Plug introduced on Sept. 14 that it is increasing operations with a European headquarters in Germany. The 70,000-square foot facility will home an innovation middle with engineering labs and technical helps, amongst different options. The ability is predicted to open at the beginning of 2022.

On Aug. 10, Plug Energy stated it broke floor on its $84 million plant in Camden County, Georgia. The plant will produce 15 tons per day of liquid inexperienced hydrogen meant to gasoline transportation purposes, together with materials dealing with and gasoline cell electrical car fleets. The plant is predicted to open in 2022.

On March 30, Plug Energy stated it deliberate to open a inexperienced hydrogen manufacturing plant in south-central Pennsylvania with Brookfield Renewable Companions. PLUG inventory jumped 11% on the information. Building is slated for the primary quarter of 2022. The plant is predicted to be on-line by late 2022.


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Plug Energy Earnings And Elementary Evaluation

On Might 14, Plug Energy restated 2020 income, including $7.2 million to deliver it to destructive $93.2 million. It decreased 2019 income by about $300,000 and 2018 income by about $400,000. In 2020 losses widened by 10 cents a share to $1.68, whereas 2019 per-share losses remained unchanged and 2018 losses widened by 3 cents a share.

Hydrogen fuel cells
(Kaca Skokanova/shutterstock.com)

CEO Andy Marsh stated the changes have been non-cash and had no impression on enterprise operations.

On Aug. 6, Plug Energy reported blended Q2 outcomes. It had a lack of 18 cents per share on income of $124.6 million.

Gross billings rose to $126 million from $75 million within the year-ago quarter. Plug Energy expects gross billings to achieve $750 in 2022.

Plug Energy stated the outcomes included authorized and accounting prices regarding the restatement of beforehand points monetary statements.

Wall Road had anticipated a 7-cent loss on gross sales of $113.8 million.

Third Bridge analyst Peter McNally says Plug Energy’s document income and robust orders “demonstrate the company has deliverable products that meet customer needs both today and in the near future.”

Nevertheless, McNally cautions that value inflation is a priority for Plug Energy and the business as an entire.

“This is a drag on profitability not just in the current results — costs grew faster than revenues — but also in the future as the company builds out new capabilities. Plug Power’s partnership model should mitigate the impact of inflation.”

Plug Energy sees hydrogen costs declining meaningfully within the second half of the yr, enhancing margins. Marsh has additionally hinted Plug Energy was near including a fifth main buyer, which he says may “do over $25 million” within the second half of 2021.

The corporate beforehand estimated gross billings of $750 million in 2022 and $1.7 billion in 2024.

On July 23, Citigroup initiated protection on Plug with a Purchase ranking and a worth goal of $35. Analyst P.J. Juvekar stated Plug Energy is “leading the way” within the nascent hydrogen financial system, which is “at the cusp of a breakout.”


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PLUG Inventory Technical Evaluation

The inventory fell 0.38% to 25.90 after asserting Q2 earnings.  However shares rebounded 7.8% to 27.91 on the following buying and selling day, Aug. 9, Shares are nonetheless properly under their 52-week excessive of 75.49 intraday on Jan. 26.

PLUG inventory plunged on March 16, when the corporate stated it was restating monetary statements. Administration cited accounting errors principally associated to noncash objects, together with the way it categorised some prices. Shares jumped after releasing the restated financials.

PLUG inventory together with different fuel-cell friends have been dragged down additional in early Might, after Ballard Energy Techniques (BLDP) missed earnings and revenue estimates and raised doubts in regards to the sector as an entire.

McNally says the accounting error raises a purple flag.

“While some may view the restatement as backwards looking and simply a matter of accounting rules, Plug Power does have future targets that Third Bridge experts have questioned,” he stated in an earlier e mail to IBD.

Plug Energy’s relative energy line goes sideways. Its RS Score is 61 out of a attainable 99, properly under the 80 and up IBD recommends. Its EPS Score is simply 7. With a Composite Score of 33, Plug is ranked No. 18 in IBD’s different vitality business group.

Fund possession at the moment stands at 35% as a rising variety of funds are shopping for Plug Energy shares. As of June 2021, 885 funds held PLUG inventory, up from 882 in March.


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Rising Competitors

McNally stated Plug Energy is successfully depending on two clients, which makes the corporate’s state of affairs fragile. “In addition, Plug Power is not the only company in this space that has been able to raise capital, so we expect stronger competition in the years to come,” he stated.

Rival FuelCell Vitality (FCEL) and Ballard Energy Techniques and Bloom Vitality (BE) are additionally gasoline cell shares within the different vitality business group.

Plug Energy is making strides to diversify. On April 29, Plug Energy introduced a plan to integrate its ProGen fuel cell engines into BAE Systems’ electric buses. The 2 corporations may even work on creating hydrogen and refueling infrastructure to end-customers use factors.

In the meantime, automakers Basic Motors (GM), Toyota (TM) and Nikola (NKLA) are wanting to embrace hydrogen too.


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Is PLUG Inventory A Purchase Now?

JPMorgan estimates the general market alternative may exceed $200 billion. Plug Energy is elevating capital to finance an bold buildout plan and forging partnerships with key business gamers.

But it surely has but to show that it may possibly obtain profitability. That is maybe as a result of the truth that for now it provides gasoline cells for only one car — forklifts. Whereas it has plans to fabricate hydrogen gasoline cells for different industries, a wait-and-see method might be extra prudent

Furthermore, there might be a hitch in Plug Energy’s plan to construct a plant in southwestern New York. On June 4, the Seneca tribe sued Genesee County Financial Growth Middle over plans to construct an industrial park that they are saying infringes on their territory. Plug Energy’s is slated to change into the primary tenant of that park.

Backside line: PLUG inventory is just not a purchase proper now as it isn’t in a purchase zone with no discernible sample forming.

Take a look at IBD Inventory Lists and different IBD content material to seek out dozens extra of the best stocks to buy or watch. 

Comply with Adelia Cellini Linecker on Twitter @IBD_Adelia.

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