Is Plug Power a buy?
Hydrogen fuel cells have become the talk of the street lately. Here’s the breakdown on $PLUG, better known as Plug Power.
Current Price: $26.235
52/Wk High: $28.70
52/Wk Low: $2.53
Market Cap: $12.1 billion
Read below for the breakdown!
Plug Power is a leading designer, manufacturer, and producer of hydrogen engines and fuelling solutions, that are used for a vast array of vehicles mainly within the industrial offroad market.
One of Plug Power’s most successful segments has been through hydrogen fuel cell-powered forklifts, used by some of the largest companies in the world.
In fact, Plug Power’s customer list includes Amazon ($AMZN), Walmart ($WMT), HomeDepot ($HD), FedEx ($FDX), and many more.
Not only has Plug Power management been successful in getting big-ticket customers but management is now expanding the company through two major acquisitions.
Recently Plug Power acquired both United Hydrogen Group and Giner ELX which builds on management’s vertical integration strategy.
The acquisition of Giner ELX will allow Plug Power to offer hydrogen to power their vehicles offered and sold to customers.
The two acquisitions led to management raising 2024 guidance and now expects $1.2 billion in revenue, $210 million in operating income, and $250 million in Adjusted EBITDA.
Lastly, Plug Powers customers have not been shut down due to the pandemic and have little downside risk, therefore, the pandemic has not much effected Plug Power, only further showing the strength of the company.
Digging into the numbers, Plug Power delivered a Q3 miss with an EPS of $-0.11 versus the analyst consensus EPS estimate of $-0.07. On the otherhand, $PLUG has seen plenty of growth under the hood.
Plug Power reported Q3 gross billings of $125.6 million, representing 106% year over year growth.
Although, Plug Power did continue to run a loss, reporting a $-1.3 million profit throughout the third quarter.
Given the company’s performance throughout Q3, management raised 2020 gross billings guidance to a range of $325 million to $330 million.
Taking a look at the balance sheet Plug Power is currently on solid footing, but an increase in cash would be more comforting.
Total Debt: $300 million
Total Liabilities: $883 million
Total Assets: $1.501 billion
Cash & Short Term Inv: $448 million
While the balance sheet is solid the valuation itself has gotten a little stretch and the stock could be due for a pullback.
Price to Sales: 35.36x
Price to Book: 16.89x
When it comes to management, Plug Powers leaders have lacked at times.
Return on Equity: -32.26%
Return on Assets: -9.46%
Return on Invested Capital: -11.67%
Taking in the numbers the analysts remain mixed on $PLUG with the mean price target currently sitting at $22.22/share, representing a -15.32% downside.
Plug Power’s high price target is $30.00/share, representing a 14.33% upside, while the low price target is $15.00/share, representing a -46.65% loss.
The big money is also not as involved with 49.81% of Plug Power being owned by institutions. Top holders include BlackRock Institutional Trust, The Vanguard Group, and D.E. Shaw & Company.
On a technical basis, Plug Power has been on fire lately, with the stock running 738.29% year to date. According to the six-month charts, the MACD is on a strong upward momentum swing within a range of 2.6622 down to 2.3730.
The six-month charts are also indicating an RSI of 71.42 and CCI of 95 both of which are on the high end of things. It is also important to note that $PLUG only trades roughly three points off its highs.
In short, if you are a believer in hydrogen fuel cell technology Plug Power is a solid long-term play. On the flip side, the stock has run an extreme amount this year and is in need of a pullback within the short term.
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Disclaimer: This is not direct financial advice, simply an opinion based on independent research.