Enthusiastic about the prospects of hydrogen and fuel cell specialist Plug Power (PLUG -4.93%), investors have sent the stock soaring more than 14% since the start of the year, which is no small feat considering the S&P 500 has risen 3.4%.

But what exactly is powering this enthusiasm? Sure, the hydrogen economy is expected to grow significantly in the coming years, but that doesn't mean Plug Power is guaranteed to prosper. Taking a closer look at the company's outlook through 2026 should provide some greater insight.

Electrolyzer sales to fuel revenue growth

Due in large part to securing major customers like Walmart and Amazon over the years, Plug Power has, undeniably, excelled at growing its top line.

PLUG Revenue (Annual) Chart

PLUG Revenue (Annual) data by YCharts.

Granted, 2020 was a bit of an aberration in terms of revenue, which the company chalked up to the vesting of stock warrants from Amazon. The trend is clear, though: Plug Power knows how to secure customers.

With regards to where the company's headed, Plug Power forecasts 2023 revenue of $1.4 billion, and it's targeting revenue of $5 billion in 2026. While investors should be circumspect about the lofty projections, it's worth noting that the company achieved its annual revenue targets in 2021 and 2020. Management expects sales to rise sharply over the next three years, predicated largely on the growth of its electrolyzer business, which enables customers to produce hydrogen on-site. By 2026, management projects that the company's electrolyzer business will account for $1.45 billion in revenue.

Prognosticating profitability... of sorts

Like the projected rise on the top line, Plug Power foresees growth on some of the lines in the middle of the income statement. From an expected 10% gross margin in 2023, Plug Power expects to widen this to a 30% gross margin in 2026. While the service and power-purchase agreements business is forecast to produce a 20% gross margin, the equipment and fuel-delivery businesses are forecast to achieve gross margins of 30% and 35%, respectively.

According to management, a surge in operating income is also on tap over the next three years. While Plug Power has logged an operating income margin of negative 99% over the past 12 months, the company expects to reach an inflection point in 2023. Speaking to the company's success in making its fuel cell and material-handling business profitable, Andy Marsh, Plug Power's CEO, stated on the company's third quarter 2022 conference call that the company is poised to make its electrolyzer and stationary-power businesses similarly profitable, leading him to claim that "You put these two items together with the real improvements in service, the 2023 targets of $1.4 billion in revenue, and exiting the year at breakeven operating margins is achievable."

And with regards to 2026, Plug Power expects to achieve a 17% operating income margin.

It's critical for investors to recognize that these projections are where Plug Power expects to reach in 2026, but that may very well turn out to be miles away from where the company actually lands. Management has a well-documented history of providing soaring profitability forecasts and coming up short.

Where Plug probably won't be

Clearly, Plug Power has some lofty ideas about where it will be financially in 2026, but there are some things conspicuously absent from the company's forecast -- namely, net income.

During the investor presentation that provides the 2026 forecast, there's no mention of net income, suggesting that the company's bottom line will still be red, and there's no indication of when that will change.

Bulls may be content with the operating income growth and surmise that the company will achieve positive net income shortly after 2026. Think again. The company fails to address this. In the same presentation that includes the 2026 guidance, Plug Power targets a 20% operating income margin in 2030 but doesn't mention net profit.

Be prudent about management's projections

Between the projections of strong gains in revenue, gross profit, and operating profit over the next three years, it's understandable why growth investors would be keenly focused on shares of Plug Power. But smart investors know that blindly following management's forecasts is a dangerous strategy, especially when the company has a history of falling short of its own expectations, as Plug Power does. Potential hydrogen investors, therefore, should be skeptical about Plug Power's gross profit and operating income forecasts for the next three years.