FCEL - FuelCell Energy: Weak Q1 Earnings And Poor Prospects (Rating Downgrade)

2024-03-08 07:00:00 ET

Summary

• FuelCell Energy reported another set of disappointing quarterly results with revenues missing consensus expectations by a mile, gross margins at multi-year lows, and cash burn increasing to new all-time highs.
• The company finished the quarter with unrestricted cash and cash equivalents of $297.5 million, down $56.2 million sequentially, as the company abstained from selling additional shares in the open market.
• A projected lack of module replacements will impact revenues in the coming years, with the issue likely to result in the company missing FY2024 consensus expectations by a mile.
• With the legacy, natural gas-powered molten carbonate fuel cell platform not likely to make a comeback anytime soon, and the new solid oxide offering still in its infancy, I would expect FuelCell to struggle for years to come.
• Due to the company's weak prospects, material cash burn, and resulting high likelihood of further dilution for common shareholders, I am downgrading FCEL shares to "Sell" from "Hold".

Note: I have covered FuelCell Energy, Inc. or "FuelCell Energy" ( FCEL , FCELB ) previously, so investors should view this as an update to my earlier articles on the company.

FuelCell Energy Q1 Earnings Review

On Thursday, FuelCell Energy reported another set of disappointing quarterly results with revenues missing consensus expectations by a mile, gross margins at multi-year lows, and cash burn increasing to new all-time highs:

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