Plug Power Inc. is an American company engaged in the development of hydrogen fuel cells and related systems, aiming to replace traditional batteries in electric vehicles and other equipment.
Founded by George McNamee in 1997, PLUG went public already in 1999. Its modern GenDrive system consisting of fuel cells with a hydrogen storage capacity enables recharging within minutes, compared to several hours for conventional lead-acid batteries. Meanwhile, the produced units are of the same or comparable size.
Plug Power is an innovative company with unique operations that warrant further examination. The aim of this article is to study the company’s fundamentals and technical aspects of its operations to project the company’s potential direction this year amidst an uncertain economic climate.
Predicting the potential movements of an asset is a critical aspect of making informed decisions. To achieve this, various market players analyze a significant amount of data and information, including:
- Company’s Financial Statements;
- Performance of the Stock;
- Current Market and Sector Trends;
- Economic and Technical Indicators;
The current economic environment is increasingly complex due to high volatility, extreme inflation, regular interest rate hikes, fears of military escalation, bank defaults, and the possibility of a global recession. These factors make predictions particularly challenging. However, this article aims to briefly analyze the available information to forecast PLUG’s performance for the current fiscal year of 2023 without offering investment advice.
Stock Forecast for 2023
Plug Power Inc. has a market capitalization of around USD 6.4 billion with almost 600 million outstanding shares, placing it in the mid-cap category. Looking at its recent stock performance, the company began the year at $12.18 per share and closed on April 6, 2023, at $9.27 per share, which represents a year-to-date performance of over -25%.
Focusing on the last 12 months, the company’s stock price curve had a declining pattern, resulting in a decline of over -67%. When comparing it for the same period with the S&P 500 as an overall market performance benchmarked, we’ll notice a significant difference, provided that the famous index saw a -8.39% decline. The 52-week high and low points for PLUG were respectively at $31.56 and $8.90 per piece.
Plug Power is considered to be an industry leader in its segment of operation. Nevertheless, it has several competitors, such as:
- Ceres Power Holdings (CWR) – is a UK producer of fuel cells for power generation and electrolyzers for green hydrogen.
- Bloom Energy Corp. (BE) – is a US manufacturer of solid-oxide fuel cell power generators, which use natural gas and biogas as fuel.
- Intelligent Energy Holdings (IEH) – is a UK-based fuel cell engineering company, focusing on the development of proton-exchange membrane fuel cell technology.
In terms of technical analysis, several ratios guide the expectations for PLUG moving forward:
- The Moving Average Convergence/Divergence (MACD), which indicates whether the stock is in a bearish or bullish run, suggests that the stock is still in a bearish run for the near short term.
- The Relative Strength Index (RSI), which represents the over- or undervalued level of the stock, shows that the price is moving deeper into the undervalued territory.
- The Bollinger Bands (BB), which demonstrate high or low levels relative to historical price performance, indicate that PLUG remains at a low level with potential downward pressure.
This trend is also supported by the various moving averages of different durations (5 to 200 days), all of which currently signal a negative outlook for PLUG. That’s what tends to happen during times of economic uncertainty and prevailing recession fears.
Beyond the technical aspects, it is worth digging into the fundamentals, primarily the key financials of the company. Looking at the profitability ratios such as Return on Assets (ROA) and Return on Equity (ROE) for the fiscal year 2022, we notice that Plug Power is still in the negative territory:
- ROA was -7.02%;
- ROE was -16.71%.
The relation of the total revenues and costs had improved, compared to the year 2020 however, the company’s overall results remained in the negative territory, with a loss of nearly USD 195 million for the year 2022 (about USD -171 million in 2021).
An important valuation metrics such as the Price to Sales Ratio for 2022 saw a 3-fold decrease, if compared to the previous fiscal year, reaching a level of 10.2. Meanwhile, the cash flow metrics such as the Free Cash Flow per Share (in trailing 12-months or TTM terms) had a negative trend since 2019, reaching a level of -2.18 per share.
|Price to Sales Ratio||10.2||31.35||13.12||3.21|
|Free Cash Flow per Share (TTM)||-2.18||-0.95||-0.5||-0.25|
Based on the results of the technical and fundamental analyses, the forecast indicates that Plug Power may experience further downward movement in the short term. This is due to the prevailing financial market concerns brought about by the banking and economic turmoil. However, in the medium to long term, the company may have growth potential, particularly with the increasing global requirements for ESG and SDG, which may provide a boost to the “green” sector.
Many analysts see significant potential for PLUG over the next 12 months. Out of 29 analysts, the median 12-month price forecast is $25.00, with a high estimate of $78.00, and low estimate of $13.00. The median estimate represents a 169.91% increase from its April 6, 2023, closing price of $9.27, while the high and low estimates represent increases of 741.57% and 28.89%, respectively.
Plug Power Inc. is a US-based mid-cap corporation, operating in the area of hydrogen fuel cell production and development of related systems, replacing conventional batteries of vehicles and equipment using electricity. The company is one of the global leaders in this field, having implemented many innovative solutions and partnering with several big names.
Analyzing the current technical parameters of PLUG as a stock highlights that it’s in the bear cycle now and could plausibly stay there in the short run, given the turbulent financial and economic environment in the world. However, having strong support on the fundamentals side, the company appears well-positioned to benefit from the next rally. Whether that comes in the medium-term or long-term remains to be seen, however, this outlook corresponds with the forecasts by most of the covering analysts.
Under the leadership of Andrew Marsh, as its President and CEO since 2008, the company grew into a leading provider of turnkey hydrogen solutions for the global green economy.
That remains to be seen, and you should do your due diligence. However, different estimates suggest that Plug Power may turn profitable within the next 3 years, given its current growth rate and strategic plans. Its revenues are expected to grow at the rate of 32.2% per annum, compared to the industry average of a mere 7.1%.
It’s important to note that determining the fair value of a company’s shares is a complex process, and any information provided is for informational purposes only and should not be construed as investment advice. However, some metrics suggest that PLUG could potentially be undervalued, and the stock has experienced a significant decline year-to-date and over the previous 52 weeks.
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