FuelCell Energy (FCEL) Stock Declines Are An Opportunity

FuelCell Energy FCEL Stock News

FuelCell Energy Inc (NASDAQ: FCEL) is tumbling in the market this morning after announcing its financial results. Unfortunatley, the company missed expectations, concerning investors.

Nonetheless, in a separate release, the company provided an update, announcing that it had restructured its business from the inside out. There may be a big opportunity here for those that buy the dip. Here’s what’s going on:

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FCEL Stock Tumbles On Financial Results

Before we get into the restructuring, let’s take a look at the financial results issued by FuelCell Energy. Unfortunately, the results weren’t quite as positive as investors had been hoping for:

  • Net Loss – During the quarter, the company produced a net loss of $36 million, working out to $0.23 per share. Unfortunately, investors are concerned about the growing net loss, a figure that came in at $17.9 million in the same quarter last year. Moreover, analysts expected for the net loss per share to come in at less than half of what it was, projecting a loss of $0.11 per share.
  • Revenue – Revenue took a dive as well, falling 38% to $11 million for the quarter. FCEL saw such a large decline in revenue as it works to move away from a product sales focus and move to a utility scale power purchase agreement focus. Product sales fell 95%, coming in at $500,000. However, generation revenue jujmped 206% to come in at $5.5 million.
  • Contractual Backlog – It’s also worth mentioning that the contractual backlog as of the end of the quarter came in at $1.32 billion, up 17% from last year.

The Change In Business Strategy Makes This Very Attractive

While FCEL is tumbling on earnings today, the stock is still a pretty attractive pick in my book. My bullish view is essentially based on the company’s focus on utility-scale power generation.

Selling products here and there is great. However, building out utility-scale power solutions is a great long-term business. Not to mention, FuelCell Energy has a key competitive advantage.

Recently, FCEL has announced quite a bit of news surrounding its new extended-life stacks. Previously, stacks would only last about 5 years. However, the new stacks are rated to last for a period of seven years, ultimately reducing maintenance expenses for utility companies.

Moreover, the company’s new stacks produce 40% more power over their life than the old stacks, ultimately reducing the overall cost of power generation.

Considering this, the new stacks at FCEL create a competitive advantage in the space that could lead to the company taking the top spot!

With the recent change in focus, the company has been pretty successful early on. In fact, in the release issued this morning about changing its business structure, the company outlined multiple projects that it has either completed or is working on, as well as multiple collaborations that can open the door to serious revenue opportunities ahead.

In a statement, Jason Few, President and CEO at FCEL, had the following to offer:

Building on our 50-year history of innovation and our leadership in the advancement of fuel cell technology, we are embarking on a new “Powerhouse” business strategy focused on strengthening our operations and industry positioning to enable the delivery of sustained profitable growth to benefit all of our stakeholders. In 2019, we largely completed the restructuring necessary to support our new business strategy, including accomplishing several foundational milestones toward achieving profitable growth and reestablishing our position of industry leadership. We are now able to focus fully on execution of our strategy and both growing our existing business and expanding into new products, markets and geographies.

We have launched a series of strategic initiatives to strengthen our financial and operational position, which we believe will enable the Company to deliver current projects on time and budget and set the stage for future growth. As we enter 2020, our recent performance indicates that we are on the right track. We are implementing a comprehensive strategy to strengthen and grow FuelCell Energy by executing on our core business, building on customer relationships, delivering and expanding our project backlog, and developing and commercializing new technologies, products and markets. Our “Powerhouse” business strategy consists of three fundamental pillars: Transform, Strengthen, and Grow.

I am proud of all that the FuelCell Energy team, along with our valued partners, has accomplished during my first five months as CEO. I am excited about our new Powerhouse business strategy and the clear go-forward plan to execute on our project commitments, build on our technical leadership, deliver improved financial results for our stakeholders, and play a critical role in environmentally sustainable baseload energy, hydrogen and energy storage.

Considering recent transactions that gives the company a strong runway of cash to get to multiple catalysts ahead. The dip in the price of FCEL today seems to represent a strong opportunity!

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