FuelCell Energy: Relentless Dilution Bodes Well For Preferred Stockholders

(10min)

Summary

  • FuelCell Energy reported uninspiring Q2/FY2024 results with negative gross margins and significant cash burn.
  • With open market sales remaining the company's primary funding source, relentless dilution for common shareholders continued.
  • Subsequent to quarter-end, the company signed a $160 million long-term service agreement in Korea, which should boost revenues significantly starting in FY2025.
  • While investors should continue to avoid the common shares, the company's Series B Preferred Stock offers a juicy 13.2% dividend yield, for income-oriented investors.
  • Considering the company's almost unlimited ability to finance operations via open market sales, I expect FuelCell Energy to honor its preferred dividend obligations for the time being.
  • Looking for a helping hand in the market? Members of Value Investor's Edge get exclusive ideas and guidance to navigate any climate. Learn More »
Nachhaltige Praktiken zur Kohlenstoffreduzierung von Fabriken. Erneuerbare Energie. Wind- und Solarenergie für nachhaltige Energie. Nachhaltiger Transport. Ökostrom. CO₂-Kompensationen und CO₂-Gutschriften.

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Note:

I have covered FuelCell Energy, Inc. or "FuelCell Energy" (NASDAQ:FCEL, OTCPK:FCELB) previously, so investors should view this as an update to my earlier articles on the company.

Uninspiring Q2/FY2024 Results

On Monday, FuelCell Energy reported another set of uninspiring

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This article was written by

20.05K Followers

I am mostly a trader engaging in both long and short bets intraday and occasionally over the short- to medium term. My historical focus has been mostly on tech stocks but over the past couple of years I have also started broad coverage of the offshore drilling and supply industry as well as the shipping industry in general (tankers, containers, drybulk). In addition, I am having a close eye on the still nascent fuel cell industry.

I am located in Germany and have worked quite some time as an auditor for PricewaterhouseCoopers before becoming a daytrader almost 20 years ago. During this time, I managed to successfully maneuver the burst of the dotcom bubble and the aftermath of the world trade center attacks as well as the subprime crisis.

Despite not being a native speaker, I always try to deliver high quality research to followers and the entire Seeking Alpha community.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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.

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