Hydrogen fuel cell technology provider FuelCell Energy (NASDAQ:FCEL) stock put in a bottom after falling more than (-75%) off its yearly highs of $20.97 made in February 2021. The pandemic winner was lifted on the clean and renewable energy hype and momentum driven from the global decarbonization initiatives.
As reality hit, shares collapsed to a low of $5.34 on Sept. 13, 2021. Shares have begun their climb back as the recent Q3 2021 earnings underscored a return to growth in its power generation segment. The Company also raised nearly $369 million in net proceeds from the sale of stock to bolster its cash to nearly half a billion in the quarter. Prudent investors looking for a bargain entry into this alternative renewable energy play can watch for opportunistic pullbacks in shares of FuelCell Energy.
Q3 2021 Earnings Release
On Sept. 14, 2021, FuelCell released its fiscal Q3 2021 results for the quarter ending in July 2021. The Company reported an earnings per share (EPS) loss of ($0.04) excluding non-recurring items, beating consensus analyst estimates for a loss of (-$0.04), by $0.01. Revenues grew 43.2% year-over-year (YoY) to $26.82 million versus $20.63 million consensus analyst estimates. Service agreements and licensing revenues rose 102% to $14.3 million from more module exchanges in the quarter.
Generation revenues rose 32% YoY to $6.2 million due to higher output from the generation fleet. Backlog decreased (-2.2%) to $1.3 billion as of July 31, 2021, reflecting continued execution of backlog adjustments for decreasing fuel pricing. The Company had $468.6 million in cash and cash equivalents as of July 31, 2021.
FuelCell CEO Jason Few commented,
“FuelCell Energy delivered higher revenue in the third fiscal quarter, both sequentially compared to the second fiscal quarter and year over year. We are pleased by the continued execution of our project backlog and the advancement of our strategic agenda in terms of infrastructure, solutions, and talent to support our ability to achieve our long-term goals.”
He continued,
“We have increased our investment in innovation and are making progress towards the availability of our Advanced Technologies solutions, including distributed hydrogen, long-duration energy storage, and hydrogen production via our solid oxide platform. These offerings will complement our commercially available carbonate fuel cell platforms that provide a scalable solution to deliver against the increasing requirements of clean, distributed power and hydrogen generation to strengthen and supplement the grid power and enable the hydrogen economy. The global energy transition continues to accelerate, and we believe FuelCell Energy is positioned to answer these opportunities with our patented portfolio of platform solutions.”
Conference Call Takeaways
CEO Few set the tone,
“Looking at our last full fiscal year ended on October 31st, 2020. We delivered revenues of approximately 71 million, comprised of our three largest revenue categories: servicing licenses, advanced technologies, and generation. All of which represent diversified sources of recurring revenue under multiyear contracts.
"In addition to those three revenue categories just mentioned, we are confident that we will regain meaningful incremental revenue from product sales in the future. In the near term, we see opportunities developing international markets including Asia, Europe, and in target customer segments domestically. We've been taking steps to rebuild our business development and go-to-market capabilities as an essential step in the strength in a pillar of our powerhouse business strategy to ultimately support growth.”
He continued,
“We've had many global customers who are utilizing our multi-featured FuelCell platforms. Many of these systems integrate combining power capabilities creating high energy efficiency levels. Other installations enable microgrids, enhancing grid resiliency and reliability. Some of our applications utilize biofuels, resulting in carbon neutral to carbon negative power, and eliminating onsite flaring. Now turning to slide 4. As a Company, we're committed to our purpose of enabling the world to live a life empowered by clean energy. The world will always need reliable power created in an environmentally responsible manner.
"We are periodically and increasingly reminded by fires, hurricanes, and other extreme weather, that grid reliability remains a critical issue that can't be taken for granted. We're committed to providing solutions that deliver on our commitment to addressing climate change and deliver clean baseload power ultimately, around the world. Today, according to the WHO, more than 1 billion people are without access to reliable power.
"With our broad product portfolio, FuelCell Energy is uniquely positioned to assist customers with decarbonization goals, leverage a wide range of feedstock, and meet the challenge of ensuring energy reliability and infrastructure resiliency. Our customers can and should be able to achieve each of these objectives. We believe the goal of decarbonization does not require deindustrialization. And that developing countries around the world should also participate in economic development alongside industrialized nations.
"Instead of non-on-site solutions that rely heavily on credits or offsets, our technology provides authentic and local solutions for clean energy and has the future promise to decarbonize industries less suited for electrification.”
FCEL Opportunistic Pullback Levels
Using the rifle charts on weekly and daily time frames provides a precision view of the landscape for FCEL stock. The weekly rifle chart bottomed out near the $5.30 Fibonacci (fib) level. Shares have been up-trending with a rising weekly 5-period moving average (MA) at $6.89 followed by the 15-period MA at $6.44.
The weekly stochastic has a mini pup rising through the 40-band. The weekly upper Bollinger® Band (BBs) sits at $10.30. The daily rifle chart has been up-trending since the daily market structure low (MSL) buy triggered above the $6.49 fib. Shares surged to peak out at the $8.91 fib followed by a channel tightening pullback from the daily 5-period MA at $8.17 to the 15-period MA at $7.15. The daily stochastic peaked and deflected back down off the 80-band.
Prudent investors can watch for opportunistic pullback levels at $7.05, $6.86 weekly 5-period MA/fib, $6.49 fib, $5.99 fib, $5.62 fib, $5.30 fib, and the $4.92 fib. The upside trajectories range from the $9.26 fib upwards to the $14.10 fib level.