The world is currently in the process of preparing for its transition from fossil fuels to sustainable energy. This transition will create new opportunities for companies that form a part of sustainable energy supply chains.
FCEL and PLUG stocks are here stay, but which company is better investment going forward?
Plug Power is a developer of hydrogen fuel storage and electricity generation systems. However, they also develop storage systems and hydrogen engines for commercial vehicles like forklifts, cargo vehicles, drones, etc. The company went public in the late ’90s and was a stock market darling during the dot-com bubble. The stock was moving sideways from then until Amazon inked a deal with a company for its fulfillment centers that included stock-warrants. The company has a market cap of $9.89 billion and is up 600+% this year after outperforming projections for the previous two quarters.
Fuel Cell Energy is also a developer of hydrogen storage and electricity generation systems. However, the company is more focused on industrial and utility-scale systems compared to Plug Power, which is more focused on commercial customers. The company was founded in 1969 and is the largest publicly traded fuel-cell manufacturer in the US. Fuel Cell Energy has installed and now maintains 50 energy plants around the world. The company has a market cap of $1.55 billion and is up 166% YTD.
Plug Power manufacturers complete hydrogen power systems for its customers, who are all commercial ones. The company has a number of verticals including on-site hydrogen storage and electricity and hydrogen powertrains for a variety of commercial applications. The company has recently revealed its roadmap for the next 4 years, at the end of which it aims to have $1 billion in revenue and $200 million in EBITDA.
The company is currently the biggest buyer of liquid hydrogen in the world. PlugPower has plans to generate $200 million in revenue from on-road applications. Their ProGen hydrogen system is based on a modular philosophy and can power electric motors from sub-1k Wh-250kWh, making it applicable to all classes of vehicles, from consumer to freight. The company plans to enter the hydrogen production market and target average daily production of 100 tons by 2024.
Fuel Cell Energy offers complete turn-key hydrogen-fuelled power solutions for its customers. Its product portfolio has solutions for on-site hydrogen storage, production, and power generation. The company recently bagged an $8 million deal from the US Department of Energy to support the design and manufacture of a state-of-the-art on-site hydrogen production system. The company also offers various financing structures to power plant hosts that avoid them having to pay any up-front capital expenditure.
Under these financing structures, the host can spread out their costs on the basis of power delivered through long-term power purchase agreements(PPA’s) or lease structures. The company offers power solutions that range from 1.4 MW to 3.4 MW. The company raised $117 million from the market and some institutional investors in October to advance its business and grow its international presence.
For Q3, PlugPower outperformed all expectations and its own guidance by reporting revenues of $125 million, up 106% YoY, and 74% QoQ. The company has raised its 2020 guidance from $310 million and $330 million. The company deployed a record 4100 fuel cell systems and 13 hydrogen refueling systems. Adjusted EBITDA for the quarter was $24 million, which is very promising as it is already well above the company’s target of 20% operating margin by 2024.
In Q3, Fuel Cell Energy reported revenues of $18.7 million, down from $22 million a year ago. Net loss increased to $15.3 million from $5.3 million and EBITDA was -$5.6 million compared to $3.2 million a year ago. It should be noted that being focused on industrial and utility-scale customers, the company has faced a particularly hard time due to the pandemic.
Plug Power looks like a much better stock as their management has been far more succinct about their future plans and has done a very good job putting the company on track to realize those plans. However, if FCEL can improve its margins, then the stock might be a worthwhile risk for investors given that Plug Power is already up 600+% this year.