Plug Power, Inc. (PLUG) provides end-to-end clean hydrogen and zero-emissions fuel cell solutions in North America and globally for supply chain and logistics applications, on-road electric vehicles, the stationary power sector, and others. It works to create an end-to-end green hydrogen ecosystem, which includes green hydrogen production, storage, distribution, and energy generation via mobile or stationary applications.

The stock has traded at an average volume of 21,726,229 over the past three months. However, its shares are down 34.7% over the past year and 45.6% over the past nine months to close its last trading session at $18.32.

While the company's fourth-quarter 2021 earnings release piqued investors' interest in early March, its first earnings report in 2022 could not produce the same results. It reported $140.8 million in sales and a loss per share of $0.27, falling short of analysts' projections of $144.5 million in sales and a loss per share of $0.16.

However, the company's exorbitant cash burn was perhaps of more concern. PLUG reported a negative $209 million in operational cash flow in the first quarter, much higher than the negative $117 million in the prior year.

Here's what could shape PLUG's performance in the near term:

Inadequate Financials

PLUG's revenue increased 95.7% year-over-year to $140.80 million for the first quarter ended March 31, 2022. However, its operating loss grew 188.3% from the year-ago value to $139.16 million. The company’s net loss surged 157.6% from the prior-year quarter to $156.49 million.

Negative Profit Margins

PLUG's trailing-12-month asset turnover ratio of 0.1% is 87.5% lower than the industry average of 0.79%. Also, its trailing-12-month ROA, ROC, and net income margin are negative 9.6%, 5.8%, and 97.3%, respectively. Moreover, its trailing-12-month negative gross profit margin of 21.4% compares to its industry average of 29.6%.

Premium Valuation

In terms of its forward EV/Sales, PLUG is currently trading at 8.56x, which is 434.8% higher than the industry average of 1.60x. Moreover, PLUG's forward Price/Sales of 11.43x is 805.7% higher than the industry average of 1.26x.

POWR Ratings Reflect Bleak Outlook

PLUG has an overall F rating, which equates to a Strong Sell in our proprietary POWR Ratings system. The POWR ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. PLUG has an F for Stability and Quality. The stock beta of 1.74 is consistent with the Stability grade. In addition, the company’s poor profitability is in sync with the Quality grade.

Of the 91 stocks in the B-rated Industrial – Equipment industry, PLUG is ranked #90.

Beyond what I've stated above, you can view PLUG ratings for Value, Growth, Momentum, and Sentiment here.

Bottom Line

The company’s widening losses and failure to meet analysts’ projects have raised investors' concerns. Analysts expect its EPS to decline by 11.1% and remain negative in the current quarter ending June 2022. In addition, the stock is expected to decline at the rate of 40% per annum over the past five years. So, we think the stock is best avoided now.

How Does Plug Power, Inc. (PLUG) Stack Up Against its Peers?

While PLUG has an overall F rating, one might want to consider its industry peers, Preformed Line Products Company (PLPC), Standex International Corporation (SXI), and Belden Inc. (BDC), which have an overall A (Strong Buy) rating.

PLUG shares fell $0.10 (-0.55%) in premarket trading Friday. Year-to-date, PLUG has declined -35.10%, versus a -15.41% rise in the benchmark S&P 500 index during the same period.

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.

More...