Plug Power (PLUG): Exploring Valuation After Major Nevada Renewable Fuel Partnership and New Clean Energy Deployments

Plug Power has drawn attention with its announcement of a strategic partnership with Edgewood Renewables for a new renewable fuel facility in Nevada. This marks the company’s first major step beyond focusing solely on hydrogen initiatives.

See our latest analysis for Plug Power.

Plug Power’s shares have seen dramatic swings this year, but momentum is clearly building. Over the past three months, the stock has delivered a remarkable 60% share price return, while its one-year total shareholder return now sits at 37%. Recent milestones, including major partnerships in both hydrogen and renewable fuels, appear to be reigniting optimism despite the stock’s still challenging three- and five-year total shareholder returns.

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Yet with shares rallying so sharply in recent months, the underlying question for investors remains: is Plug Power’s turnaround only just beginning, or have the latest achievements and growth prospects already been fully priced in?

Most Popular Narrative: 6% Overvalued

Plug Power’s latest fair value assessment comes in at $2.78 per share, which is slightly below its last closing price of $2.95. This suggests that, according to the most widely followed narrative, recent optimism may have already been reflected in the market.

Operational improvements such as gross margin enhancements from Project Quantum Leap, restructuring, facility consolidation, and favorable hydrogen supply agreements are already yielding sharply better margins and targeting breakeven gross margin by Q4. This can lead directly to improved net margins and earnings.

Read the complete narrative.

Curious about what’s fueling this premium? The foundation of the narrative rests on bold forward-looking numbers, including compounded revenue gains and margin shifts that were only quietly discussed last year. Want to learn more about the growth levers and profit projections behind this valuation? The real story lies beneath the headline.

Result: Fair Value of $2.78 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing cash burn and delays in large-scale project approvals could quickly dampen confidence and change the outlook for Plug Power’s turnaround story.

Find out about the key risks to this Plug Power narrative.

Another View: SWS DCF Model Points to Deep Undervaluation

While the market appears to price Plug Power above its fair value based on analyst consensus, our SWS DCF model tells a strikingly different story. According to this approach, Plug Power is trading at a steep 59% discount to its estimated fair value of $7.23 per share. This suggests substantial upside if the company executes on long-term growth.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Plug Power for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Plug Power Narrative

If you’re interested in digging deeper or seeing things from a different angle, you can piece together your own view in just a few minutes. Do it your way

A great starting point for your Plug Power research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.

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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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