When Plug Power Inc (NASDAQ:PLUG) announced its most recent earnings (30 September 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Plug Power has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see PLUG has performed. View our latest analysis for Plug Power
Was PLUG weak performance lately part of a long-term decline?
I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique allows me to examine different stocks on a similar basis, using the most relevant data points. Plug Power’s most recent bottom-line -$130.0M, which compared to the prior year’s level, has become more negative. Given that these figures are somewhat myopic, I have determined an annualized five-year value for PLUG’s net income, which stands at -$57.6M. This doesn’t look much better, as earnings seem to have steadily been getting more and more negative over time.
Additionally, we can assess Plug Power’s loss by researching what has been happening in the industry along with within the company. Firstly, I want to briefly look into the line items. Revenue growth over the past couple of years has grown by 27.45%, indicating that Plug Power is in a high-growth period with expenses racing ahead elevated top-line growth rates. Eyeballing growth from a sector-level, the US electrical industry has been growing its average earnings by double-digit 24.45% over the previous year, and a more muted 4.93% over the past five years. This suggests that whatever uplift the industry is benefiting from, Plug Power has not been able to reap as much as its average peer.
What does this mean?
Though Plug Power’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to forecast what will happen in the future and when. The most insightful step is to assess company-specific issues Plug Power may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Plug Power to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for PLUG’s future growth? Take a look at our free research report of analyst consensus for PLUG’s outlook.
2. Financial Health: Is PLUG’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.