2. Since the company’s stock soared the early 2000’s up to $48 a share, FuelCell Energy
has fell below a dollar. According to Yahoo Finance, the company is also expected to show
negative sales growth for the end of the 2015 year.(Yahoo Finance). However the company
is also working on major developments that could revolutionize the clean energy industry.
Along with these major developments, the Fuel Cell Energy has also just begun an
expansion project that will enhance their logistics and improve manufacturing. That is why
I recommend FuelCell Energy as a buy, after quarterly earnings are announced.
In 1969, Energy Research Corporation was founded by two chemical engineers
names Bernard Baker and Martin Klein. In 1970 the company was funded by the US
military and focused on low temperature fuel cells. In the 1980s then the company
switched its focus to high temperature fuel cells because of better opportunity of
commercial applications. Then in 1999 the company switches its focus to carbonated fuel
cells, and switches its name to FuelCell Energy. Since the switch, FuelCell Energy’s
operations produces, services, installs and operates stationary fuel cell power plants all
around the world. They produce their power with out burning fuels, creating a clean and
quite environment. Last year alone the company produced enough clean energy to power
over 245,000 homes in the US for a year. (FuelCellEnergy.com).
According to greentechmedia.com, FuelCell Energy has recently been working with
the Department of Energy on a new first of its kind application for low cost carbon dioxide
capture and compression technology. This technology will capture about 60 tons of CO2,
while producing 40,000 kilowatt-hours of electricity, per day. The application will also
eliminate about 70% of smog producing nitrogen oxide. With coal power depended states
having to meet the EPA’s clean power plan, this technology is catching the eye of
3. legislatures and power industry stakeholders. This groundbreaking application is also
gaining attention of power industry stakeholders because of how cheap it is compared to
other carbon capture technologies. Other carbon capture technologies cost almost double
the amount of coal fired power plants, where this will cost one-third of the cost of coal fired
power plants. (Pyper).
Along with new technology the company has also just filed an 8-K form to expand its
facility in Connecticut. This form will allow the company to receive a loan $10 million at a
fixed interest rate of 2%, repayable over 15 years. The Company will also receive a tax
credit for up $10 million earned during the span. With this money the company plans to
expand its manufacturing facility from 65,000 square feet to 102,000 square feet. The
expansion will allow FuelCell Energy to keep more inventory at its manufacturing facility,
and close its satellite warehouses, thus improving logistics, flexibility and lowering costs.
(8-K)
July 31st, 2015 April 30th 2015 January 31st, 2015
Share Price(Yahoo) $0.84 $1.23 $1.24
Company Size(Fuel Cell
energy.com)
622 employees 622 employees 622 employees
Revenue(yahoo) $41,356,000 $28,600,000 $41,670,000
EPS(Market Watch) -$0.03 -$0.02 -$0.02
P/E -$28 -$61.5 -$62
4. FuelCell Energy may look like a company who is going out business, because of its
share price declining throughout the year, yet I see it as an opportunity to buy. In October
the company announced a 20-year purchase agreement with the county of Alameda for the
Santa Rita Jail. The project will not be done until 2016 and the jail will pay by the kilowatt-
hour basis. This means the company will not start to be paid until 2016, however once the
payments begin, the company will have an increase in revenue. This will cost FuelCell
Energy a lot in the beginning due to the development of the project and bring down Net
Income for this quarter. Thus bringing down its EPS, P/E ratio, and Share price again.
However, right after the price drops for its next quarterly earnings, that is the time to buy.
Along with the revenue stream of the jail that will start coming in 2016, I think the
company will catch the eye of more energy companies with its new carbon capture
technology. The company will also be improving its logistics and lowering it’s transpiration
cost with its new expansion of its manufacturing facility, thus bringing down its Cost of
Revenue. I am not the only one who feels this way; Yahoo finance analysts estimate a 23.5%
growth in sales growth next quarter and a 55.3% growth in sales for the year (Yahoo
Finance).
5. Company Price per share Quarterly
Revenue Growth
Market Cap R&D
FuelCell Energy $0.86 -4.20% 263.65M 18,240,000
Ballard Power $1.27 -22.2% 194.87M 14,294,000
Cummins Inc. $100.37 -5.55% 17.73B 754,000,000
RD= Research Development
Though FuelCell energy has a lower stock price then Ballard Power and Cummins
Inc., I do not think that is a good indicator to compare businesses. The Quarterly Revenue
growth shows that FuelCell Energy is out preforming Ballard Power and Cummins Inc.,
which is a very good sign considering the expected growth in revenue of Fuel Cell energy
next year. However the market cap of Cummins may seem out of reach of either company
to catch up to, I believe it is very possible. Research development is essential in the energy
field. If Fuel Cell can convert into positive quarterly growth I think the company will really
start investing more into research Development, to lead them to even cleaner ways to
produce energy.
Strengths: FuelCell Energy’s focus on clean ways to produce energy will
work as strength. With states and Government giving subsidies to
environmentally responsibility companies, I think every energy company
has an interest in the technology and application the company produces.
Weaknesses: If The United States lowers subsidies to less pollution
production energy companies.
6. Opportunities: The new Technology the company has made that will reduce
carbon and save companies money. If the United Nations Climate change
summit asks for less carbon producing pollution and the US agrees.
Threats: the stock price going down since 2004, could have some investors
worried. If the investors pull out, the company will lose it’s funding and
maybe see bankruptcy.
