Some folks might contend that Plug Power (NASDAQ:PLUG) is a pioneer in the hydrogen fuel cell industry. That may or may not be the case, but it still doesn’t mean you should load up on PLUG stock now.
As you may recall, the Plug Power share price rallied in June and July. However, the company’s investors could soon cough up their recent gains.
Indeed, this is probably a good time for investors to pull the plug, as an upcoming event could reveal major problems with Plug Power.
PLUG Stock: Prepare for Disappointment
Plug Power plans to release its second-quarter earnings results on Aug. 9. Analysts expect the company to report EPS of -$0.27.
But then, Wall Street also expected Plug Power to report EPS of -$0.27 in the first quarter, and the actual result was -$0.35. That’s just one of many quarterly earnings misses for Plug Power, which hasn’t beaten or met analysts’ consensus quarterly EPS forecasts in a long time.
The spike in PLUG stock during June and July probably isn’t because of Plug Power’s fundamentals. If anything, the primary cause was probably a broad-market rally and a general rotation into risk-on assets.
Plug Power’s Deteriorating Financials
Given Plug Power’s poor track record when it comes to quarterly EPS misses versus beats, this may be a good time for the company’s investors to consider taking profits.
If you read this in time, you might still have time to get out before Plug Power’s earnings announcement. And as the old saying goes, you’ll never lose money by taking profits.
Whether it’s before or after earnings, you’ll surely agree that Plug Power’s financials aren’t ideal. InvestorPlace contributor Ian Bezek’s assessment gets straight to the point.
“Since its inception, Plug Power has racked up an accumulated deficit of $3.3 billion,” he said.
Bezek points out that in 2022, Plug Power “generated a negative 28% gross margin.” To that, we can add that Plug Power’s balance of cash, cash equivalents and short-term investments has declined over the past year.
Also, during the past year, Plug Power’s free cash flow has gone deeper into negative territory.
PLUG Stock Isn’t a Top Hydrogen Pick in 2023
There’s nothing wrong with being bullish about the U.S. hydrogen market. Investors should be selective. With the company’s fundamentals, Plug Power has serious issues to overcome.
The upcoming quarterly earnings event could be make-or-break for Plug Power. Possibly, the company could deliver another EPS miss and reveal more financial problems.
Therefore, PLUG stock gets a “D” grade and isn’t a highly recommended pick. Feel free to investigate hydrogen stocks in general, if you’d like. However, don’t be in a big hurry to bet your hard-earned money on Plug Power.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.