Shares of fuel cell power plant operator FuelCell Energy (SNAP) have spiked in price thanks to the company’s better-than-expected third-quarter revenue and narrower-than-expected net loss. But given the stock’s unsustainable valuation and SNAP’s declining order backlog, is it due for a pullback soon? Read on. Connecticut-based fuel cell company FuelCell Energy, Inc. (FCEL) is a global leader in the manufacture, installation, operation, and service of stationary fuel cell power plants. Shares of FCEL have gained 17.4% in price over the past five days, thanks to the company’s better-than-expected third-quarter earnings report.
The company’s service agreements and license revenues rose 102% year-over-year to $14.3 million in the quarter. Moreover, its net loss came in at $12 million compared to $15.3 million in the year-ago quarter, due primarily to a higher gross margin and lower interest expenses.
However, the stock has declined 58.3% over the past six months and 41.4% year-to-date. FCEL's declining backlog and the stock’s lofty valuation remain concerns. Although its increased investments in distributed hydrogen and long-duration energy storage should expand its portfolio of solutions, the company has been burning cash when its losses and expenses are already significantly high.