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How is FuelCell Energy share price benchmarked with peers?

The FuelCell Energy [FCEL] share price has charged higher this month on hopes of an accelerated push towards clean energy solutions.

FuelCell Energy designs, manufactures, and operates fuel cell power plants that work on natural gas or biogas and is helping lead the move towards clean energy. Its plants can be used for carbon capture, local hydrogen production and long duration energy storage.

Its share price climbed from $6.00 at the close on 4 October to $8.74 at the close on 18 October. It fell back to $7.57 at the close on 28 October. According to analysts Trefis, Fuel Cell stock rose 12% over a five-day trading period ending 21 October, compared to the broader market (S&P500) which rose by 2.5%.

Trefis said the FuelCell share price has been helped by its third quarter figures released in September which revealed revenues of $26.8mn, up from $18.7mn this time last year. It also posted a net loss of $12million, better than the $15.3million in the same period in 2020.

California’s Senate Bill 155 was a booster for Fuel Cell. It including a two-year extension of the Fuel Cell Net Energy Metering program, known as Fuel Cell NEM. The Biden’s administration’s clean energy and hydrogen initiatives towards net-zero emission targets contribute to Fuel Cell’s revenue prospects.

Although his $1 trillion-plus infrastructure bill has been slimmed down, there should still be some major funding within it for fuel cell technologies and a subsequent benefit for the FuelCell Energy share price.


FuelCell Energy's Q3 revenues, up from 18.7mn in Q3 2020



Gaining by association

FuelCell Energy’s share price has been lifted along with other sector stocks after hydrogen fuel cell systems developer Plug Power [PLUG] announced a raft of corporate partnerships and stated that its sales could soar to over $800 million in 2022, and to over $3 billion by 2025, reported Trefis.

All sectoral shares soared when rival Bloom Energy [BE], recently signed a new $4.5 billion new partnership with South Korea’s energy firm SK Group, reported FX Street. Bloom will produce about 500MW of power by 2024 with analysts suggesting that this could put it in prime position to take further advantage of Asia’s move towards clean energy.


The naysayers

Despite this Trefis isn’t a buyer of Fuel Cell Energy stock. “FuelCell’s products, although apparently more economical compared to rivals, are bulkier and less flexible, and uptake has been weak in recent years,” it wrote as reported by Forbes. “Rival Bloom Energy is expected to see more steady growth, as well. Considering this, we do not think that FuelCell Energy is a compelling bet on the fuel cell market.”

According to Market Screener a consensus of 11 analysts agree holding an ‘underperform’ rating and a $6.89 target price.

“Rival Bloom Energy is expected to see more steady growth, as well. Considering this, we do not think that FuelCell Energy is a compelling bet on the fuel cell market” - Trefis


There is no doubt that FuelCell is a speculative stock and there are risks to investors putting their hard-earned cash into it and the sector as a whole.

It is notable that it is not FuelCell but its rivals that are striking these major deals. It can’t hang on their coat tails forever.


Fuel Cell share price discount

Much of this is also nascent technology and of course there is plenty of competition from those other innovative manufacturers. Fuel Cell is still to make its maiden profit which after 20 years in business does raise questions.


FuelCell's market cap, short of its main industry rivals


There are positive signs, however. The company's loss is narrowing, its revenues growing and the environment for clean energy is only going to accelerate as net zero and global warming targets loom larger.

Its market capitalisation is at $2.7 billion, on Yahoo Finance, short of Bloom Energy’s $3.5 billion and PlugPower’s $18.78 billion.

That is both a world of clean energy such as hydrogen and carbon capture but also energy storage. We’ve seen over the last few weeks with rising gas prices that a lack of wind and solar storage means that the world is still reliant on fossil fuels for its energy.

Battery storage solutions such as those provided by Fuel Cell Energy can solidify renewable energy output and make us all less reliant on gas and coal fired power stations.

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