FuelCell Energy (FCEL) was rallying hard in the past week leading into the company’s Q4 earnings day. The stock had climbed nearly 45% as investors were optimistic about what was to come.
That trend has completely reversed as the company delivered disappointing results for the quarter in Tuesday’s trading session. FCEL is down nearly 7% this morning.
The company saw product revenue drop more than 50% for the quarter, with overall revenue falling 42%. This resulted in a figure of $22.5 million, which came in shy of the $25 million FactSet consensus. Other segments that suffered include generation revenue and advanced technologies revenue, which fell 2.7% and 43.1% respectively.
Meanwhile, the company managed to trim its losses and reported profitability increases. While there was still a loss of $31.2 million, (7 cents a share), it was a positive surprise as analysts were expecting a loss of 8 cents.
This was also an improvement from this time last year when the company posted a loss of $43.3 million (11 cents a share). Some of this can be attributed to an improvement in service agreements, which contributed a loss of $829,000 compared to the $1.1 million loss this time last year.
The company also saw its cash reserves dwindle in the quarter, with just $403.3 million in total cash and short-term investments compared to $414 million a few months ago.
President and CEO Jason Few says that despite the fourth-quarters struggles, the company is committed to holding its liquidity position and bolstering its balance sheet’s strength. FuelCell will continue to manage its cash prudently while remaining calculated in how it allocates its capital.
FCEL is now down 60% in the last year, and investors are wondering if it’s time to cut losses and move on as the stock sits at just $1.42/share. We’ve found 3 things through the VectorVest stock analyzer that you need to see before you make your decision either way.
FCEL Has Poor Upside Potential and Safety, But Its Timing is Good
VectorVest saves you time and stress through an intuitive stock-rating system. You’re given all the insights you need to make emotionless, calculated decisions in 3 simple ratings: relative value (RV), relative safety (RS), and relative timing (RT).
Each of these sits on its own scale of 0.00-2.00 with 1.00 being the average. This makes interpretation quick and easy, empowering you to win more trades with less work.
It gets even better though. You’re offered a clear buy, sell, or hold recommendation for any given stock at any given time based on its overall VST rating. As for FCEL, here’s what we’ve uncovered:
- Poor Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (based on a 3-year price projection) to AAA corporate bond rates and risk. This offers far superior insights than a simple comparison of price to value alone. As for FCEL, the RV rating of 0.78 is poor. In saying that, VectorVest does show that the stock is fully valued at its current price.
- Poor Safety: The RS rating is an indicator of risk. It’s computed through an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. FCEL has a poor RS rating of 0.73 right now.
- Good Timing: Despite falling more than 7% in today’s trading session, FCEL is still up nearly 22% in the past few months. That being said, the stock has a good RT rating of 1.12. This is based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.
The overall VST rating of 0.91 is a bit below the average but deemed fair nonetheless. VectorVest has placed a HOLD recommendation on this stock - but we encourage you to learn more through a free stock analysis today and dig deeper before making your decision!
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VectorVest advocates buying safe, undervalued stocks, rising in price. FCEL is falling in today’s trading session after delivering disappointing earnings. While the stock does have poor upside potential and safety, its timing is good right now.
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