Update: Plug Power Earnings

| About: Plug Power, (PLUG)
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Q2 2014 EPS reported of $0.02 per share compared to ($0.14) in the year ago period.

Q2 revenue reported was $17.3M million, up 131% Y/Y.

The Q2 report has confirmed my earlier opinion of the stock.

Plug Power (NASDAQ:PLUG) reported earnings today that were roughly in line with analyst EPS and revenue estimates. EPS came in at $0.02 (negative $0.04 excluding an adjustment for fair value of common stock warrants). Revenue came in at $17.3 million, which was $570,000 above estimates. As of 8:30 this morning, shares are expected to open up strongly.

Notable items from Plug's press release include:

  • Gross margin of 17% in the "Product" segment.
  • Negative 38% overall operating margin.
  • Cash and cash equivalents of $168.6 million.

The revenue growth at Plug is ramping up and the balance sheet is currently strong. Those are the items that I expect the company (and many investors) to focus on. In fact, in the company's press release it was stated that:

The Company also reports a gross margin of 17% on its GenDrive product for the second quarter. Even more notably, Plug Power revenue, at $17.3 million for the second quarter, is three-fold greater than that seen in the first quarter of 2014. [bold is mine]

However, in my previous article about Plug, I contended that margins are the key metric for the company. Plug must be able to make money to be a viable business. In the first half of 2014, the company reported an operating loss of $14.02 million. That compares to a first half 2013 operating loss of $12.995 million. Plug has been a public company for nearly 15 years and has never come close to profitability.

I applaud the revenue growth. Also, the increase in expenses for Q2 2014 was due to Plug's efforts to rapidly expand its sales efforts; those expenses could pay off in the future. But I will be looking closely at Plug over the next few quarters to see if there is any sign that it can show long-term profitability. Until then, the shares are still a sell in my opinion.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.