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$7.17 0.42 (6.22%)
7/3/2008 1:00 PM

FuelCell Energy, Inc. (FCEL)

CAPS Rating:
**

Develops and manufactures fuel cell power plants for clean, efficient and reliable electric power generation. Currently commercializing its core carbonate fuel cell products, offering stationary applications for commercial and industrial customers.

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Avatar KeefyR (< 20) Submitted: 2/29/08 12:03 AM : Outperform Start Price: $7.18 FCEL Score: 6.71

How does a company lose money every year for 10 straight years and keep operating? The company says that they need to sell 75-100 MW per year to reach a positive net income. They had something like 20-30 MW of backlog at the end of 2007 (up from around 5-8 MW at the end of 2006). They are making progress.

But their present manufacturing capacity is 50 MW per year with a current expansion program up to 60 MW. So even if they grow their sales to 100 MW, they will have to invest a huge sum of money to deliver the goods. It seems that this will raise the required sales even higher. One good note, they have little debt. Which leads to the questions how does a company lose money every year for 10 years and still keep operating?

The stock price doesn't seem to be related to the company's performance. This stock jumps around so much, I am sure that there will be another peak soon. It has only happened like 5-6 times in the last 10 years. But the valleys seem to be getting lower.

So here is my guess: it will remain low for a short time and when fuel prices go up, it will jump up and then quickly drop again. I will pick outperform and then if it gains 50% (price of around $10), I will end my pick and then pick underperform.

IF, and I mean IF, they can get through the expansion phase, I think they will do well. Very long term (10 years): OUTPERFORM.

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Avatar MENGIV (< 20) Submitted: 5/19/08 7:39 PM

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What are you reading that says they lost money every year for ten years? Im reading their 2006 revenue was $80.8 million and they had a net income of $13.6 million. Their income statement / cashflow statement shows the operating costs went up from Q4 2006 at 31.98 to Q3 2007 to 100.61 Total net income for Q4 2006 was 4.35 rising to total net income Q3 2007 7.96. So are we looking at the same stock and what am I missing?

Aside from that many analysts are suggesting there is a glut of solar fuel cells on the market by years end that could cause prices to drop which in turn will hit bottom lines on many of these solar stocks and that there could be a shakeout in the industry that eliminates many of the weaker players and strengthens the survivors.

In consideration of their low debt of 1.9 million and inconsideration they are a company in China with some apparent government blessings, it would seem to me they have better than normal odds to be one of the survivors. An investment of 1000 shares $12,500 in Dec. 2006 had a value on 5-16, 2008 of $22,840. So despite the up and down spikes thats a return of about 82% in about two and a half years.

THe Q1 2008 Earnings report is scheduled for May 21, 2008 when we will know the latest news.

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