FCELB - FuelCell Energy - Stock Rallies On Improved Q3 Results But Product And Execution Issues Remain

• Shares rally on improved third quarter results with both top and bottom line performance coming in above consensus expectations. Gross margin turned positive for the first time in many quarters.
• Outperformance almost solely caused by an unusually high number of module exchanges boosting service revenues. Key generation portfolio also showed improved output and margins.
• Company continues to suffer product and execution issues as evidenced by the renewed delay of the important Groton Naval Submarine Base project.
• Record quarterly cash burn likely caused management to aggressively sell new shares into the open market. Unrestricted cash more than tripled to $469.5 million quarter-over-quarter, thus providing the company with ample time to develop a sustainable business model and address ongoing challenges.
• Speculative investors and traders looking for a gamble might consider taking a position going into the company's Q4 results in late January as the recent sale-and-leaseback of the San Bernardino fuel cell power plant should result in revenues again outperforming consensus expectations.

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