FuelCell Energy's Most Glaring Weakness Was on Full Display This Quarter

FuelCell Energy's  (NASDAQ: FCEL  ) fuel cell technology could be a major step forward in how we produce electricity and potentially transportation fuels. If only the company could gain some momentum in becoming profitable. While sales have been growing steadily over the past five years, the company has hit a couple bumps so far in 2014. Surprisingly, though, sales is not the biggest issue for FuelCell Energy, which is actually selling its products and services for a profit. This past quarter saw gross profit slip to a mere 4.1%, which is less than a fifth of its most direct competitor, Ballard Power Systems (NASDAQ: BLDP  ) .

Tune into the video below to find out how much of an effect these weak margins will have on the path to profitability of both FuelCell Energy and Ballard Power Systems.

Will this stock be your next multi-bagger?
Give us five minutes and we'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

 


Read/Post Comments (6) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 09, 2014, at 2:40 PM, geltstavern wrote:

    Tyler,

    I hope the SEC looks into your attempts to manipulate this stock price...

  • Report this Comment On June 09, 2014, at 5:34 PM, jaketen2001 wrote:

    Tyler,

    Ballard is not FCEL's closest competitor, Bloom is. Bloom and FCEL both manufacture exclusively stationary fuel cell systems based on similar technologies that both operate at high temperatures and can both ingest normal low pressure natural gas to create back up and or primary (in the the 10s of MWs) power supply.

    Ballard's PEM fuel cells are more for transportation and must use or refine H2 before it gets in to the fuel cell.

  • Report this Comment On June 10, 2014, at 1:53 AM, mark1326 wrote:

    The Fools are foolishly attacking every segment of the fuel cells market ..... I guess im the only idiot seeing record breaking sales this year .....

    5 years from now fuel cells will be everywhere and made up of a different composition, just as solar panels and batteries have changed ....

  • Report this Comment On June 10, 2014, at 10:19 AM, Pagapa wrote:

    A drop in a company's gross margins is a legitimate reason for concern about the company's strength and future potential for profit.

    In response, you chose to ask and answer a signal question: how do the company's gross margins, at their newly reported levels, compare to those of a company in the same industry (although as Jaketen already pointed out, not really a competitor).

    A more important question to ask and answer is if you are interested in helping investors make informed decisions, "Why did the company's margins decline?"

    Had you asked that question, you could have found the answer in the transcript of the company's conference call for the quarter where the company's CFO made it quite clear that the reduction was due in large part to pulling some expenses that the company had expected to incur later in the year forward. Since he also stated that revenues are expected to be substantially higher than the revenues for this quarter in the second half of the year, shareholders can expect the low margins for this quarter to be offset during the remainder of the year.

  • Report this Comment On June 10, 2014, at 10:19 AM, TMFDirtyBird wrote:

    @jaketen

    From a technology standpoint Bloom and FCEL are closer, but Bloom is a private company. I compared FCEL and BLDP here because they are two publicly listed companies and it could possibly help people make a decision regarding investing in these two companies.

    Also, BLDP does have a methanol based PEM rather than H2 and it represents more than 1/3 of the company's revenue last FY. Sure, it's mostly sued for telecom backup power, but it does have a multi-MW offering made to compete w/FCEL and bloom.

    Hope that clarifies.

    Tyler

  • Report this Comment On June 12, 2014, at 3:36 PM, MNDLBRT wrote:

    FCEL has a business mix that is changing. When they sell turnkey systems, which means they provide the whole plant & about 2 years of plant supervision/ operation they sell twice as much per kW/hr of fuel cells produced & have margins 2x of the fuel cell stacks alone. They have a lot in discussions and the actual sales & mix should be good in the next quarter. Furthermore, they are on track to be EBITDA positive in Q4. They can support a worldwide customer base, and have made it easier for the financing part with the turnkey package. Costs are coming down in materials & manufacturing.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2987617, ~/Articles/ArticleHandler.aspx, 9/22/2014 10:33:52 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement