Plug Power Inc.’s (NASDAQ:PLUG): Plug Power Inc., an alternative energy technology provider, engages in the design, development, commercialization, and manufacture of hydrogen and fuel cell systems for the material handling and stationary power markets primarily in North America and Europe. The US$427m market-cap company announced a latest loss of -US$78.2m on 31 December 2018 for its most recent financial year result. As path to profitability is the topic on PLUG’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for PLUG.
PLUG is bordering on breakeven, according to the 7 Electrical analysts. They expect the company to post a final loss in 2020, before turning a profit of US$29m in 2021. Therefore, PLUG is expected to breakeven roughly 2 years from today. In order to meet this breakeven date, I calculated the rate at which PLUG must grow year-on-year. It turns out an average annual growth rate of 52% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, PLUG may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for PLUG given that this is a high-level summary, but, take into account that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing I would like to bring into light with PLUG is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in PLUG’s case, it has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
There are too many aspects of PLUG to cover in one brief article, but the key fundamentals for the company can all be found in one place – PLUG’s company page on Simply Wall St. I’ve also compiled a list of key factors you should further examine:
- Historical Track Record: What has PLUG’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Plug Power’s board and the CEO’s back ground.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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