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Plug Power (PLUG) to Report Q4 Earnings: What's in the Cards?

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Plug Power Inc. (PLUG - Free Report) is expected to release fourth-quarter 2021 results later this week.

The company delivered better-than-expected results once in the trailing four quarters and missed estimates thrice. Earnings surprise for the last four quarters was a negative 70.19%, on average. In third-quarter 2021, the company’s loss per share of 19 cents was wider than the Zacks Consensus Estimate of a loss of 9 cents.

Zacks Investment Research
Image Source: Zacks Investment Research

In the past six months, shares of the company have lost 12.9% compared with the industry’s decline of 8.5%.

Factors at Play

The growing popularity of hydrogen fuel cell solutions is expected to have supported Plug Power’s performance in the fourth quarter of 2021. The company’s strength across electric mobility, material handling and stationary power markets, along with its efforts to strengthen sales channels, is likely to have driven its performance in the quarter.

The company’s strong product portfolio, including GenDrive, GenFuel, GenSure and ProGen product lines coupled with its efforts to expand and strengthen its global presence through multiple strategic partnerships, might have been beneficial in the to-be-reported quarter. In November 2021, it entered into a contract with Fertiglobe and its partners, Sovereign Fund of Egypt, Scatec ASA and Orascom Construction, to provide electrolysis technology for a 100 megawatts electrolyzer. Its partnership with Groupe Renault has enabled it to tap the hydrogen-powered light commercial vehicle market in Europe. Also, the collaboration with SK Group has been strengthening its position in the markets of Asia.

Given the strength across the company’s acquired businesses, buyouts are likely to have boosted its performance in the fourth quarter. Plug Power acquired Applied Cryo Technologies, Inc. (November 2021), which has been strengthening PLUG’s green hydrogen ecosystem and reducing costs related to hydrogen infrastructure and logistics networks. Also, with the buyout of Frames Group (December 2021), it enhanced its capabilities to deliver a range of turnkey electrolyzer solutions.

However, escalating cost of sales and operating expenses have been a concern for Plug Power over time. In the first nine months of 2021, its total cost of sales increased 66.7% year over year, while total operating expenses jumped 124.7%. The impacts of supply-chain disruptions and hike in labor and raw material costs are likely to have affected its margin and profitability in the fourth quarter. Also, its investments associated with product development, growth initiatives and activities related to the integration of acquired assets are expected to have hurt its earnings in the fourth quarter.

Owing to its extensive regional presence, risks arising from unfavorable movements in foreign currencies and geopolitical issues might have hurt Plug Power’s quarterly performance.

The Zacks Consensus Estimate for fourth-quarter loss per share is pegged at 12 cents, indicating an improvement from a loss of 19 cents recorded in the last reported quarter. The consensus estimate for revenues of $158 million suggests a 9.7% increase on a sequential basis.

Earnings Whispers

According to our quantitative model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) to increase the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

This is the case here as given below:

Earnings ESP: Plug Power has an Earnings ESP of +19.34%, as the Most Accurate Estimate is pegged at a loss of 10 cents, narrower than the Zacks Consensus Estimate of a loss of 12 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 #3.

Other Key Picks

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

Franklin Electric Co., Inc. (FELE - Free Report) has an Earnings ESP of +4.76% and a Zacks Rank of 1, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Franklin Electric’s earnings is pegged at 63 cents per share for the to-be-reported quarter. FELE’s shares have gained 1% in the past six months.

Sharps Compliance Corp. has an Earnings ESP of +22.73% and a Zacks Rank of 3, currently.

The Zacks Consensus Estimate for Sharps Compliance’s earnings is pegged at 4 cents per share for the to-be-reported quarter. SMED’s shares have lost 30.7% in the past six months.

Graphic Packaging Holding Company (GPK - Free Report) has an Earnings ESP of +1.12% and a Zacks Rank of 3 at present.

The Zacks Consensus Estimate for Graphic Packaging’s earnings is pegged at 37 cents per share for the to-be-reported quarter. GPK’s shares have gained 3.7% in the past six months.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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