[1] Market Valuation: At P/S of 55.4, FCEL stock is more expensive per dollar of sales compared to 5.2 for BE
Market ValuationBloom EnergyFuelCell Energyvs FuelCell EnergyAs of 11/22/2021 Price To Sales Ratio (P/S)5.255.4CheaperPrice To OpInc Ratio (P/EBIT)-42.3-47.2-Price To Earnings Ratio (PE)-29-40.7-
[2] Growth & Profits: Considering the valuation, the market appears to be undervaluing BE's higher growth and demonstrated profit generation ability - BE has demonstrated better revenue growth: -9.3% last Q (qoq), 3.5% last Q (yoy), 15.9% LTM, and 29.5% annually in last 3 FY - In comparison, FCEL has grown at 92.2%, 43.2%, 11.9%, and -9.5% respectively, during the same periods - Similarly, BE has shown greater profit generation promise: BE, -18.9% average margin, 2% average margin expansion, and -14.4% cash flow - The corresponding values for FCEL stand at -81.8%, 48.9%, and -100%Note: Average margin is based on average of last Q, LTM, and last 3 FY, while margin change is based on last Q margin vs 3Y average
Growth & ProfitBloom EnergyFuelCell Energyvs FuelCell Energy As of 11/22/2021 Revenue GrowthLast Q Growth (QoQ)-9.3%92.2%Growing SlowerLast Q Growth (YoY)3.5%43.2%Growing SlowerLTM Growth15.9%11.9%Growing FasterLast 3 Fiscal Year CAGR29.5%-9.5%Growing Faster ProfitabilityLast Q OpInc Margin-21.2%-39.5%Loss MakingLTM OpInc Margin-12.4%-117%Loss MakingLast 3 Fiscal Year Average-23.2%-88.4%Loss MakingLTM FCF Margin-14.4%-100%Cash Burner
[3] Financial Risk: Then, is the market is assigning more risk to BE? Unlikely as the company does not appear to be at higher risk vs FCEL - BE has a better debt position, with debt as % of equity of 0.0% vs 0.3% for FCEL - FCEL has more cash cushion, with cash as % of assets of 53.3% vs 8.5% for BE
Financial RiskBloom EnergyFuelCell Energyvs FuelCell Energy As of 11/22/2021Debt as % of Equity0%0.3%Lower Debt LoadCash as % of Assets8.5%53.3%Worse Cash Position
[4] Market Returns: BE is cheaper, has higher growth, and no extra risk; Appears to be a reasonable choice but what about market returns? - FCEL has higher average annualized return of 15.6% vs 9.6% for BE based on key market periods - These key market periods include, year-to-date, pre-covid to now, and 1, 2, and 3 years prior to covid
Precovid date is taken as end of Feb 2020
Notes:
[1] Q = quarter, LTM = last twelve months, FY = fiscal years, yoy = year-on-year, qoq = quarter-on-quarter
[2] Revenue growth decision is made by giving more weightage to long-term revenue growth (3-year average) and lesser weightage to quarterly growths
[3] Margin mentioned is average of last Q, LTM, and last 3 FY; margin increase is average of increase in last Q vs LTM and increase in last Q vs 3-FY average