The fuel cell industry has been on fire lately as Plug Power Inc (NASDAQ:PLUG) won contracts to supply mobile power units to Wal-Mart for fueling forklifts. Clean energy is becoming a focus in corporate initiatives, and the shine from this acceleration in business for one clean energy vendor has helped lift shares of FuelCell Energy Inc (NASDAQ:FCEL) as well. Before a bearish report on Plug Power sparked a sell-off earlier this afternoon, FuelCell was soaring to three-year highs and had nearly doubled in the last five trading days in anticipation of last night's earnings. The anticipation hasn't turned into revenue yet though, and while I am hopeful that FuelCell will find its niche over the long term, there are some things to be concerned about now.

As an investor, you need to consider FuelCell on its own rather than as a comparable company to Plug Power because the opportunity may be farther out in time and the fundamentals are weaker than headlines appear. 

Revenue growth is slowing, and there are big hurdles ahead
The company reported revenue of $44.4 million and negative EPS of $0.04, slightly ahead of the Street's revenue estimate of $43.08 and in line with the expected earnings loss. At first glance, posting year-over-year revenue growth of 23% and beating the Street's revenue expectation looks pretty solid. But look beyond the headlines: Revenue growth is down from 57% in the last quarter and headed into tough comps two quarters from now. When you consider this company as an investment, you need to look at the growth trajectory and not just how the company performed relative to estimates.

Bookings is slowing as well
Usually if a company has weak revenue growth, it can get a pass if bookings are strong. Bookings is a combination of the revenue the company recognizes and the additional backlog the company has signed but not recognized. However, backlog fell for the fourth consecutive quarter, implying that bookings will remain weak even as revenue growth falters.

FuelCell's market opportunity is low-margin and very different from Plug Power's
FuelCell provides fixed power generation plants like this one for Dominion Resources in Bridgeport CT. It's a far cry from providing mobile power to forklifts and is not a proven business yet because the gross margins are so low. In the quarter, FuelCell generated $2.2 million of gross profit -- that's profit before things like research and development. This amounts to a 5% gross margin, which doesn't offer confidence that earnings will flow through to shareholders any time soon. If the company can gain scale, this problem could resolve itself, but even at $55 million in revenue, the gross margin was only 10%.

It's easy to get caught up in the hope and hype for cleaner energy sources, and when the winning company finds the right formula there will be huge rewards. However, like Google's search algorithm or Amazon's distribution model the bulk of the rewards go to the one winner.