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FuelCell Energy: Buying The Turnaround Story

Nov. 02, 2021 4:41 PM ETFuelCell Energy, Inc. (FCEL) Stock23 Comments
Stephen Tobin profile picture
Stephen Tobin


  • A new CEO is driving change at the original FuelCell company.
  • The financial standing of FCEL has been transformed over the last two years, making it an investable company.
  • New products, new focus, and an uptick in share price make this a compelling trade idea.

Cartoon 3D rocket upswing from a red arrow. Business turnaround concept.

Jarmo Piironen/iStock via Getty Images

FuelCell Energy (NASDAQ:FCEL) appointed a new CEO in 2019. Jason Few has a proven track record in turnaround situations and a good reputation within the industry. Two years later, the company has a flawless balance sheet, good access to capital, a less capital-intensive way

This article was written by

Stephen Tobin profile picture
I look at small to mid-cap companies with disruptive technology. I provide competitive analysis of companies and often research the founders and their previous endeavors.  I follow, investigate and report on companies that I believe have growth potential and highlight some of the ones best avoided. I invest with a two-year time frame but often keep investments for far longer.I am the third generation of investors in my family, my grandfather lost money in the 1929 stock market crash, and the oil crises of the 1970s almost wiped out my Father. I traded through the dot com bubble and the credit crisis. The family has learned the hard way to choose winners, avoid losers, cut losses early, and let winners run. I have an MBA and qualifications in accounting and company valuation. I have been a full-time investor and analyst for several years and began my career with the Bank of America in the 1980s. My Father concentrated on computers and banking stocks, and my Grandfather transport and utilities. I still have some of their original holdings. Currently, I am focused on the electrification of everything.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of FCEL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

My ideas are generally contrarian and focus on the Competitive situation of a company. In this space, I am also long CGRN, WPRT, LFG

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (23)

Interesting article. Stock down ~45% since it was posted.
Stephen Tobin profile picture
Just technicals but the 50 period MA is about to cross the 200 period MA, this happened in November 2019 and November 2020 on both occasions it lead to a 300% increase in share price. I opened a third trade again using leverage @ $9.67.
only time will tell where Fuel Cell will go > it did good earlier in the year and crashed back to earth. Maybe Plug is a better power play.
Stephen Tobin profile picture
@Xandi yes maybe, plug just looks so expensive though.
The balance sheet ignores debt in showing equity = to total assets?
Henrik Alex profile picture

Not sure what you mean. The balance sheet shows approximately $82.7 million in long-term debt vs. $468.5 million in cash.
@Henrik Alex equity should = total assets less total liabilities. It is shown to = total assets with being reduced by liabilities. So 523.5 total assets less 269.1 total liabilities = 254.4 equity NOT 523.5 equity. That’s a huge overstatement of equity. The author should correct his work for this!
Henrik Alex profile picture

Yes, it's wrong but the company's 2020 numbers are outdated anyway and do not reflect the company's current balance sheet appropriately. It's a pretty mediocre article anyway.
Backlog is an issue. Why buy one of their systems if all it does is sit in the to-do stack for who knows how long?
Henrik Alex profile picture
@Mike the Elder

Come on, the backlog mostly consists of future revenues generated from power purchase agreements.
@Henrik Alex Here’s what made me cringe about the “backlog” issue:

- … the company was always short of cash to develop new products and work on its enormous backlog.
- … It has an enormous 1.3 billion dollar backlog of work that seems to have been on the books forever,

IMO something seems amiss about having a long backlog and yet seeks more orders. Need more info on that backlog as to: Are they in a position to work the backlog down and deliver goods, and How long will it take to work the backlog down. Need to know more about this backlog, it sticks out like a sore thumb.
Henrik Alex profile picture
@Mike the Elder

I tried to explain the issue to you above. Even if the company should get a handle on ongoing project execution issues, this wouldn't result in backlog coming down meaningfully as the vast majority is tied to 20-year power purchase agreements and service contracts for existing plants.

So the company will recognize approximately $50-$60 million each year from the existing backlog until the late 2030s.
farmersgroup profile picture
FCEL is very lucky to have this new CEO. I’ve just bought some more. Should be $15 soon.
Henrik Alex profile picture

Not sure what you mean. The stock price doesn't have anything to do with the CEO change two years ago. The ESG hype helped the company to survive by selling tons of shares into the open market but execution remains abysmal.
Unlike all of you, I’ve bought, I’ve held and I’m in a great position to make a huge profit while you speculate on Fcel’s future!
This company is a zombie. It lucked out when Biden was elected and quickly sold (a lot of) shares to firm up its Balance Sheet. Without that, BK was a probability.

Its share price continues to be inordinately affected by the possibilities of the EV and battery markets. Industries from which it generates zero revenues.

Revenues relative to market cap (and therefore share price) are ridiculously low. Losses will continue because this company offers little to the energy markets.

Holding FCEL for the long term is a seriously bad idea.
I learned about FCEL after I moved out of Danbury, CT. I was well aware of Ethan Allen, a furniture designer, but I guess FCEL was so diluted it just washed away out of sight. Anyways, I'm terribly excited for the day when we'll be transacting in crypto, driving glorified club cars, and lighting the office w hydrogen power, all courtesy of more strip mining for coal. i mean, what else can cheaply get us what we want when we want it in the most round-about way?
Preserve & Prosper profile picture
Thanks for the optimistic update. Given Fuel Cell's long, dismal record of apathetic sales and endless losses, I have a really hard time seeing it grow into its nearly $3 billion cap anytime soon. The huge backlog never seems to migrate from "someday" to "now" on the income statement.

Fuel Cell stock remains a favorite among eco-investors enthused about hydrogen fuel cell technology, who are willing to overlook mundane stuff like sales and profits in their fervor over the technology. I'll sit on the sidelines until there is some evidence of a prolonged surge in Fuel Cell's business even if I give up upside in the stock.
Henrik Alex profile picture
@Preserve & Prosper

And the fact, that the company has very little to do with hydrogen at this point :-)
Henrik Alex profile picture
Thanks for the link to my article but discussing FY2020 numbers doesn't make any sense as things have changed considerably again. Balance sheet has become even stronger thanks to management relentlessly diluting shareholders by selling new shares into the open market.

The company's Tri-Gen technology has been available for years but there's still only the Toyota pilot project in California which solely exists because of generous state funding and still hasn't been completed. Certainly not a game changer for the company.

The Exxon carbon capture collaboration is behind plan and the company has missed out on a number of milestones. Today's 8-K basically states that their current product is not suitable for being used in the much anticipated Rotterdam pilot project.
Stephen Tobin profile picture
@Henrik Alex Hi Henrik, I agree with everything you have written which is why I linked your article. You explain all the risks that go with a trade in FCEL. As the article makes clear it is buying into a new management team and their strategy, they have made progress in some areas but have a long way to go. The trade is speculative, I did make this clear in the conclusion that I have taken a short-term derivative position and not made an investment. Hopefully, if things continue to go well I may be able to invest in the future.
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