Stock Alert for FuelCell Energy Inc. (FCEL)
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    Stock Alert for FuelCell Energy Inc. ($FCEL)

    FuelCell Energy Inc. (NASDAQ: $FCEL)

    FuelCell Energy Inc. (FCEL) designs, develops, manufactures and markets fuel-cell power plants for electric power generation to it customers in North America, Europe and Asia.  The Company’s carbonate fuel-cell products include Direct FuelCell Power Plants, which produce electricity from natural gas and biogas fuels.  The Company’s primary customers include prisons, government, public utilities, hotels, breweries, food processors and wastewater facilities.  Founded in 1969, the Company is headquartered in Danbury, Connecticut.

    Share Statistics (30-Apr-10) FY

    2008

    FY

    2009

    %

    Chg

    Q1 2009 Q1 2010 %

    Chg

    Symbol FCEL Revenue, $Mn 100.7 88.0 -12.6% 21.7 14.6 -32.7%
    Current price $2.75 Gross marg. -49.4% -34.1% -39.3% -43.8% -37.7% -42.1%
    52wk Range: $2.57-5.47 Oper. margin -92.2% -75.5% -28.5% -89.4% -98% -26.3%
    Avg Vol (3m): 811,649 Net margin -92.8% -78.1% -26.5% -91.7% -100% -26.6%
    Market Cap. 232.26M
    Dil. Shares Outst. 84.40M EPS, $ -1.408 -0.993 -29.5% -0.301 -0.183 -39.2%

    Source: Reuters.com, SEC Filings.

    Financial Summary

    Financial Strength (30-Apr-2010) Company Industry Sector S&P 500
    Quick Ratio (MRQ) 1.49 0.79 1.45 0.71
    Current Ratio (MRQ) 2.09 1.15 1.81 0.84
    Long-Term Debt to Equity(MRQ) 382.88 20.08 88.99 142.8
    Total Debt to Equity (MRQ) 388.79 44.55 117.45 204.59

    Source: Reuters.com, SEC Filings.

    Analyst Consensus

    The mean of nine analysts polled by Thomson Reuters rate shares of FCEL an “Outperform.”

    Analyst Recommendations and Revisions

    1-5 Linear Scale Current 1 Month Ago 2 Month Ago 3 Month Ago
    (1) BUY 3 3 3 3
    (2) OUTPERFORM 4 4 4 4
    (3) HOLD 1 1 1 1
    (4) UNDERPERFORM 1 1 1 1
    (5) SELL 0 0 0 0
    No Opinion 0 0 0 0
    Mean Rating 2.00 2.00 2.00 2.00

    Source: Reuters.com, SEC Filings.

    Investment Highlights


    Overview

    In the United States, the commercial fuel cell market is expected to reach $975 million through 2012, a nearly sixfold increase from 2009.  The largest demand for fuel cells comes from power generation, growing 41% annually, with the goal of reducing pollution and foreign dependency.  The portable electronics market currently is the fastest growing market for fuel cell power generation.

    Globally, the fuel cell industry is expected to reach $18.6 billion by 2013.  The three leading markets for the technology include automotive, stationary and portable applications, with projected sales revised to $35 billion if the automotive applications market accelerates as speculated by some industry analysts.

    Initially, the most likely leading consumer of fuel cell technology will come from commercial and public entities, as the economic advantages of converting to renewable energy sources are of paramount concern of stockholders invested in energy intensive businesses, as well as initiatives undertaken by state and municipal governments critical to industry support.

    Fuel cell technologies become economically very attractive as an alternative to traditionally electricity production as higher oil price levels are reached, driving a flood of new investment into renewable energy during most of the past decade.   With increasing government-sanctioned programs, tax cuts, grants, better overall returns on investment capital are expected to facilitate rapid consumer acceptance and adoption of most forms of renewable energy technology.

    Fossil Fuels Prices Influence Investment in Fuel Cell and Other Renewable Energy Technologies

    Spot prices of oil and natural gas exploded to $147 per barrel and $13.5 per mcf (million cubic feet) of natural gas in late June of 2008, respectively, then dropped to $35 per barrel and $3.50 per mcf, respectively, in December 2008.   Since December 2008, oil has recovered to $85+ per barrel, while natural gas is anticipated to approaches $5 to $6 per mcf by the end of 2010.

    Correlation analysis reveals as the price of spot oil, investment volume into renewable energy stocks increase as well.  Publicly traded renewable energy companies rallied strongly in 2009 during the strong move up in the price of oil, and conversely dropped along with the spot price of fossil fuels.

    Since capital formation of the renewable energy is correlated strongly to fossil fuels prices, factors affecting oil and natural gas price are important considerations in an investment into any renewable energy enterprise.

    Energy analysts cite the post-June 2008 plunge and subsequent oversold condition in oil and gas prices to panic liquidation of contracts by hedge fund managers during the credit and liquidity crisis, which began in earnest in September of 2008.  However, as the global economy stabilizes, the spot price of oil has firmed.

    Growing employment and GDP have recently been reported in Australia, China, Malaysia, Thailand, Viet Nam and Singapore, providing evidence that an Asian economic rebound is underway.

    Since the demand for energy correlates strongly with overall economic activity, oil and natural gas prices may continue higher as excess inventories are depleted and diminishing new supplies struggle to satisfy this demand sometime in 2010, according to the Energy Information Administration (EIA).  Increased investment in efficient renewable energy technologies is expected to follow GDP growth, which affect fossil fuels prices and demand for alternatives.

    Company

    The Company realizes revenue from the sale and installation of fuel cell power plants, component parts sales, long-term service contracts, electricity sales through power purchase agreements, and research and development contracts with customers.

    Revenue is generated worldwide, with North America (United States, primarily), Europe and Asia as the regions of focus.  Additionally, the Company maintains projects and contracts with the U.S. government.

    A recent decision by the California Public Utilities Commission to allow the State of California’s three major utilities to use natural-gas fuel cells has opening up a new potential source of revenue for the Company.  The Company’s 1.4-megawatt fuel cell will be installed for the state’s largest public utility, Pacific Gas and Electric (PG&E) this year, affording the Company exposure of its energy-efficient product design.

    The Company’s molten carbonate fuel cell achieves a 47% fuel-to-electricity efficiency rating, and achieves a 90% rating when radiant energy is used to heat airspace, or a swimming pool, for example.  These high levels of efficiencies compete well against efficiency metrics of Ceres Power, ClearEdge and Panasonic, the Company’s main competitors, which boast similar efficiencies of between 80% and 90%.

    Latest Company News

    On April 12, the Company announced it had been chosen to participate in several large-scale fuel-cell projects for the California Public Utilities Commission (CPUC).  The contracts signed together with the CPUC enables the Company to demonstrate its FCE 1.4 megawatt fuel-cell power plants.  Power generated from the power plants will heat housing and swimming polls as well as irrigation at the plant site.

    Technical Analysis

    Source: http://stockcharts.com/h-sc/ui?s=FCEL

    FCEL trades below its 13-day moving average. This bearish sign is significant because the 13-day moving average is downwardly sloped.

    The MACD for FCEL currently indicates a bearish signal.  The MACD is below the signal line, a 9-day moving average of the MACD.  The MACD is below the critical level of 0, which implies the past price action had been negative.  Overall, the chart is bearish.

    Comparative Analysis

    Company Name Ticker Price/ Mrkt. Cap. P/E P/S
    Apr-30-2010 symbol Share, $ $ Mn 2009 2010 2009 2010
    Ballard Power System Inc. BLDP 2.35 197.54 n/a n/a 4.23 n/a
    Ceres Power Holdings CWR 114.00 n/a n/a n/a n/a n/a
    Panasonic Corp. PC 14.60 30,230 n/a 18.25 0.42 n/a
    Indus. Elect. Equip. Medium 22.80 n/a 1.79 n/a
    FuelCell Energy Inc. FCEL 2.75 232.26 n/a n/a 2.87 n/a

    Source: Thomson Financial

    Insider Trading Activity

    NET SHARES PURCHSE ACTIVITY

    Inside Purchases – Last 6 Months

    Shares Transaction
    Purchases 100.000 1
    Sales n/a 0
    Net Shares Purchased (Sold) 100,000 1
    Total Insider Shares Held 16.12M n/a
    % Net Shares Purchased (Sold) 0.6% n/a

    Net Institutional Purchases — Prior Qtr to Latest Qtr
    Shares
    Net Shares Purchased (Sold) (2,806,960)
    % Change in Institutional Shares Held (6.2%)

    Source: Yahoo Finance

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