Plug Power Jumps 13.7% After New Supply Deals—Does the Rally Signal Real Value?

• Curious whether Plug Power is finally a bargain or simply a falling knife? You're not alone, especially with all the attention the company’s been getting from growth-minded investors.
• Plug Power’s stock price jumped 13.7% over the last month, although it’s still down 8.0% for the past week and sits well below last year. This highlights just how quickly market sentiment can change.
• Recent headlines have centered on Plug Power securing new supply deals and gaining traction in clean energy projects. Both of these developments have fueled some renewed optimism. Industry analysts are watching closely to see if these changes translate into a sustainable turnaround or just another temporary boost.
• When we break down its value score, Plug Power clocks in at 2 out of 6, suggesting it is only undervalued on a couple of fronts. Let’s explore what standard valuation approaches show right now, then stick around for a look at a smarter way to judge value by the end of the article.

Plug Power scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Plug Power Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model projects a company’s future cash flows and discounts them back to today’s value, offering a snapshot of what the business might actually be worth right now. This method tries to cut through market noise by focusing on fundamental cash generation.

For Plug Power, the latest model uses a two-stage approach emphasizing Free Cash Flow (FCF). Currently, Plug Power's FCF stands at minus $1.03 billion, meaning the company is burning cash as it invests in growth. Analyst estimates suggest this negative trend will continue for a few more years, but projections expect a turnaround, with FCF climbing to $383.5 million by 2029. In the next decade, the FCF forecast reaches $1.07 billion by 2035, though these far-future numbers rely increasingly on extrapolation rather than analyst reports.

According to this DCF model, Plug Power stock has an intrinsic value of $6.99 per share. Given today’s share price, this indicates the stock is trading at a 62.1% discount compared to its intrinsic value. This method views the stock as substantially undervalued relative to its long-term growth potential if the forecasts prove accurate.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Plug Power is undervalued by 62.1%. Track this in your watchlist or portfolio, or discover 831 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Plug Power.

Approach 2: Plug Power Price vs Sales

The Price-to-Sales (P/S) ratio is often the go-to metric for valuing companies that are not yet profitable, such as Plug Power. It provides a quick sense of how much investors are willing to pay for each dollar of the company’s revenue, sidestepping the issue of negative earnings while still offering a solid benchmark for growth-focused firms in the scaling phase.

Growth expectations and business risk play a big role in what is considered a “normal” P/S ratio. Higher growth and lower risk typically justify a higher multiple, while companies with slower growth or more uncertainty generally trade at lower multiples.

Currently, Plug Power trades at a P/S ratio of 4.66x. This compares to an industry average of 2.23x and a peer average of 3.76x, indicating the stock is priced above comparable companies in the electrical sector.

Simply Wall St’s “Fair Ratio” is a metric that calculates the P/S ratio Plug Power should trade at, accounting for its growth outlook, risk profile, profit margins, industry, and market cap. Unlike simple comparisons to peers or industry averages, the Fair Ratio provides a tailored benchmark grounded in the company’s specific context.

Plug Power’s Fair Ratio is 0.18x. Since this is significantly below the actual 4.66x at which it is trading, the stock appears considerably overvalued on a revenue multiple basis.

Result: OVERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1394 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Plug Power Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives, an easy, intuitive approach that lets you blend your own perspective on a company’s story with the numbers behind its potential.

A Narrative is more than just financial data; it's your view of how a company’s journey, outlook, and strategy shape its future revenue, margins, and fair value. By linking the story behind Plug Power to a financial forecast and a fair value estimate, Narratives make valuation more dynamic and personal.

On Simply Wall St’s Community page, millions of investors use Narratives to map their assumptions onto the latest numbers and market developments. Narratives help you decide when to buy or sell by letting you compare each Narrative’s Fair Value to the actual market price, so you see which outlook you align with, all in one place.

What’s more, Narratives update automatically as news, earnings, or forecasts change, ensuring your perspective always reflects the most current information.

For Plug Power, one Narrative might be optimistic, assuming rapid adoption of hydrogen fuel, a price target of $5.00 per share, and strong execution, while another could be more cautious, estimating limited margin improvement and a fair value of just $0.55 per share.

Do you think there's more to the story for Plug Power? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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