Better Buy for 2022: Bloom Energy vs. Plug Power
Green hydrogen is a sustainable energy source produced from regenerative energy sources through water electrolysis. The global green hydrogen market is poised to advance from $0.3 billion in 2020 to $9.8 billion by 2028, showing a vast CAGR of 54.7% during the forecast period, Allied Market Research reports. In addition, the EU's intentions to reduce its dependence on imported fossil fuels from Russia can act as an additional tailwind for this industry.
Since the start of 2022, the green hydrogen industry has been experiencing a sharp decline, as evidenced by the 38.35% loss in the Global X Hydrogen ETF (HYDR), compared to SPDR S&P 500 Trust ETF (SPY) 16.46% decrease over the same period. On the other hand, this underperformance grants investors the opportunity to scoop up shares of the next-generation clean energy companies at a sizable discount.
BE produces, sells, and installs solid-oxide fuel cell systems for on-site power generation in the U.S. and worldwide. PLUG is a leading maker of hydrogen cells for electric mobility and stationary power markets in North America and Europe.
Year-to-Date (YTD), BE stock has plunged about 40%, while PLUG has dropped nearly 45%.
On May 10th, Plug Power experienced a series of price target cuts from Wall Street analysts after it had missed both top and bottom-line consensus in Q1. For instance, Susquehanna analyst Biju Perincheril decreased the price target on PLUG stock from $33 to $30. In addition, Plug Power experienced another price target cut to $31 from $49 at Craig-Hallum.
Recent Quarterly Performance & Analysts Estimates
On May 5th, Bloom Energy reported earnings for the first fiscal quarter of 2022. In Q1, the company generated a record total revenue of $201.04 million on 375 acceptances, representing a 3.6% year-over-year increase but missing estimates by $19.75 million. The revenue growth was mainly driven by a 409.7% YoY increase in Installation revenue to $13.55 million and a 10% YoY growth in Electricity revenue to $18.7 million, offsetting a 3.2% YoY decrease in Product revenue of $133.55 million. Additionally, Bloom Energy disclosed a Non-GAAP EPS of ($0.32), missing analysts' consensus by $0.21.
The company’s first-quarter Adjusted EBITDA loss came in at $24.97 million compared to a positive Adjusted EBITDA of $16.06 million in a year-ago quarter.
Currently, Wall Street expects BE's earnings to be ($0.16) per share in FQ2, which is a 29.7% YoY growth. However, analysts anticipate its revenue to drop in the second quarter of 2022 by 2.14% YoY to $223.57 million.
For its fiscal first quarter, which ended March 31st, 2022, Plug Power's revenue grew 95.7% year-over-year to $140.8 million, primarily driven by higher sales of fuel cell systems, related infrastructure, and equipment. Notably, PLUG's net revenue from this segment increased 132.7% year-over-year to $108.9 million. It is also important to note that the fuel cell systems, related infrastructure, and equipment segment's gross margin stood at 18.4% in Q1, significantly down from 38.1% as of 1Q21 amid inflationary pressures.
Besides, the company missed the Wall Street revenue consensus estimates by 2.19 million, concerning investors and leading to a sell-off of PLUG stock after earnings. Also, its GAAP EPS has been reported at ($0.27), missing analysts estimates by $0.11.
Analysts reached a consensus EPS estimate of ($0.19) for the second quarter of 2022, representing a 5.32% year-over-year decrease. However, Wall Street projects PLUG's revenue to rise by 51.93% year-over-year to $189.24 million in FQ2.
Comparing Options Market Sentiment
Looking at the June 17th, 2022, option chain for both BE and PLUG, let's determine options market sentiment by analyzing the calls/puts ratio. In BE's case, the open calls/open puts ratio at the $14.00 strike price comes in at 2.38x, implying a bullish options market sentiment. The open calls/open puts ratio for PLUG at the $17.50 strike price is 0.34x, indicating a heavy bearish options market sentiment.
Bearish Options Bets Placed On PLUG
Not surprisingly, PLUG's earnings miss led options traders to bet on its future stock price decrease. Consequently, the open interest levels for December 16th, 2022, $12.50 puts increased on Tuesday. According to barchart.com, the open contracts rose by 4,233 contracts to about 4,250. For the buyer of those puts to break even, PLUG stock would need to plunge to $10.09, implying about a 36% downside from Plug Power's current price.
While both Bloom Energy and Plug Power should be able to capitalize on the industry's growth in the long term, I believe that Bloom Energy is currently a better pick because of its slightly better financials, better options market sentiment, and brighter growth prospects in challenging 2022.
BE shares were trading at $13.45 per share on Wednesday morning, up $0.16 (+1.20%). Year-to-date, BE has declined -38.67%, versus a -14.99% rise in the benchmark S&P 500 index during the same period.
About the Author: Oleksandr Pylypenko
Oleksandr Pylypenko has more than 5 years of experience as an investment analyst and financial journalist. He has previously been a contributing writer for Seeking Alpha, Talks Market, and Market Realist.Better Buy for 2022: Bloom Energy vs. Plug Power StockNews.com