In line with its vertical integration strategy in the hydrogen business, Plug Power Inc.’s PLUG has completed the buyouts of United Hydrogen Group Inc. and Giner ELX. The strategy, which part of a five-year plan, was put forward in September 2019.These acquisitions will assist the company in its transition from low-carbon to zero-carbon hydrogen solutions.
Rationale Behind the Acquisitions
Plug Power expects demand for hydrogen from its existing customers to touch 100 tons per day in 2024 and the acquisition of United Hydrogen will increase its existing hydrogen production capacity by 10 tons per day and the same can be further expanded when the need arises. Thus, the company can enjoy the benefits of rising demand besides boosting its hydrogen generation capacity through its strong inorganic growth profile.
Meanwhile, Giner ELX takeover will aid Plug Power to augment its overall green hydrogen supply capabilities and add substantial manufacturing capabilities to cater to the global market for electrolyzers.
Taking into consideration the expected contribution from these acquired assets, the company raised its financial targets for 2024. This includes 20% increase in revenues to $1.2 billion, 23.5% improvement in operating income to $210 million and a 25% rise in adjusted EBITDA to $250 million.
In the next five years, Plug Power aims to be one of the largest green hydrogen generation companies in the United States and globally, thereafter. To this end, the company is undertaking initiatives either forging partnerships or by steadily working with the existing ones. Such activities to switch to green hydrogen will not only help the company meet its current customer demands but also expand its operations in the fast-emerging global hydrogen markets.
Zacks Rank & Price Performance
The stock currently has a Zacks Rank #3 (Hold). In the past six months, shares of the company have skyrocketed 106.8% against the industry’s decline of 12.5%.
Stocks to Consider
A few better-ranked stocks in the same industry are IIVI Incorporated (IIVI - Free Report) , AZZ Inc. (AZZ - Free Report) and ABB Ltd (ABB - Free Report) . Presently, IIVI Incorporated sports a Zacks Rank #1 (Strong Buy) while the other two carry a Zacks Rank#2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
IIVI Incorporated pulled off average positive earnings surprise of 52.08% in the last four quarters. The Zacks Consensus Estimate for fiscal 2020 earnings has moved 40.7% north in the past 60 days.
AZZ Inc. delivered average positive earnings surprise of 6.17% in the trailing four quarters. The Zacks Consensus Estimate for fiscal 2020 earnings has remained unchanged in the past 60 days.
ABB Ltd came up with average positive earnings surprise of 30.77% in the previous four quarters. The Zacks Consensus Estimate for 2020 earnings has been revised 9.4% upward in the past 60 days.
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