Unraveling the Future of Bloom Energy Corp (BE): A Deep Dive into Key Metrics
Long-established in the Industrial Products industry, Bloom Energy Corp (NYSE:BE) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 5.66%, juxtaposed with a three-month change of -20.49%. Fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Bloom Energy Corp.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Financial strength rank: 3/10
Profitability rank: 2/10
Growth rank: 3/10
GF Value rank: 8/10
Momentum rank: 5/10
Based on the above method, GuruFocus assigned Bloom Energy Corp the GF Score of 60 out of 100, which signals poor future outperformance potential.
Understanding Bloom Energy Corp Business
Bloom Energy Corp, with a market cap of $2.99 billion, designs, manufactures, sells, and installs solid-oxide fuel cell systems ("Energy Servers") for on-site power generation. These Energy Servers are fuel-flexible and can use natural gas, biogas, and hydrogen to create 24/7 electricity for stationary applications. In 2021, the company announced plans to leverage its technology and enter the electrolyzer market. Bloom primarily sells its systems in the United States and South Korea. Despite its innovative offerings, the company has been grappling with an operating margin of -15.87% and sales of $1.33 billion.
Financial Strength Breakdown
Bloom Energy Corp's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 0, positions it worse than 0% of 2231 companies in the Industrial Products industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The company's Altman Z-Scoreis just -0.44, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.59 indicates a struggle in handling existing debt levels. The company's debt-to-equity ratio is 5.09, which is worse than 98.77% of 2439 companies in the Industrial Products industry. A high debt-to-equity ratio suggests over-reliance on borrowing and vulnerability to market fluctuations.
Profitability Breakdown
Bloom Energy Corp's low Profitability rank can also raise warning signals. Additionally, Bloom Energy Corp's Gross Margin has also declined over the past five years, as evidenced by the data: 2018: 16.72; 2019: 12.43; 2020: 20.87; 2021: 20.32; 2022: 12.37. This trend underscores the company's struggles to convert its revenue into profits.
Growth Prospects
A lack of significant growth is another area where Bloom Energy Corp seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -1.8 per year over the past three years, which underperforms worse than 77.07% of 2734 companies in the Industrial Products industry. Stagnating revenues may pose concerns in a fast-evolving market.
Conclusion
Given Bloom Energy Corp's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. While the company has made strides in the Industrial Products industry, its financial health and growth prospects raise concerns about its ability to sustain performance in the long run. As value investors, it's crucial to consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article first appeared on GuruFocus.
