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What's in Store for Plug Power (PLUG) This Earnings Season?

Zacks Equity Research

Plug Power Inc. PLUG is set to release second-quarter 2019 results on Aug 6, before market open.

In the last four quarters, Plug Power surpassed estimates once and missed thrice, the average negative surprise being 46.25%. In the last reported quarter, the company’s loss of 15 cents per share was wider than the Zacks Consensus Estimate of loss of 8 cents.

In the past three months, the company’s shares have lost 16.3%, wider than the industry’s decline of 6.3%.

Let’s see how things are shaping up for this announcement.

Factors to Influence Q2 Results

High cost of sales and operating expenses, on account of services performed on fuel cell systems and related infrastructure, have been a major concern for Plug Power. We believe that unwarranted rise in costs and expenses might prove detrimental to its second-quarter performance.

In addition, increasing liabilities are a concern for Plug Power. Notably, at the end of first-quarter 2019, the company’s total liabilities were $365.7 million. Moreover, it is witnessing increase in its interest expenses. We believe that high-debt levels, if unchecked, will increase its financial obligations and prove detrimental to its second-quarter profitability.

Moreover, given the company’s extensive presence in North America and Europe, its business operations are exposed to risks arising from geopolitical issues. In addition, Plug Power’s international operations have exposed it to risks arising from unfavorable movements in foreign currencies, which might hurt its to-be reported quarter’s earnings.

However, strength in the on-road electric vehicle markets, driven by the increased adoption of hydrogen fuel cell electric vehicles will be conducive to its top line in the second quarter. Also, the company is optimistic about the prospects of other electric vehicle markets beyond material handling, supported by modular designs like ProGen engine, leading technologies and strategic collaborations with industry partners.

Earnings Whispers

Our proven model provides some idea on the stocks that are about to release earnings. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The case with Plug Power is given below:

Earnings ESP: It has an Earnings ESP of +20.00%, as the Most Accurate Estimate of loss of 8 cents is narrower than the Zacks Consensus Estimate of loss of 10 cents.

Plug Power, Inc. Price and EPS Surprise

Plug Power, Inc. Price and EPS Surprise

Plug Power, Inc. price-eps-surprise | Plug Power, Inc. Quote

Zacks Rank: The company carries a Zacks Rank #4 (Sell).

As it is, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Key Picks

Here are some companies from the Zacks Industrial Products sector you may want to consider as our model shows that these have the right combination of elements to beat estimates this earnings season:

Axon Enterprise, Inc. AAXN has an Earnings ESP of +10.21% and a Zacks Rank of 1.You can see the complete list of today’s Zacks #1 Rank stocks here.

Sealed Air Corporation SEE has an Earnings ESP of +1.34% and a Zacks Rank of 2.

Emerson Electric Co. EMR has an Earnings ESP of +0.43% and a Zacks Rank #3.

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