Ballard Power: Weak Prospects Reflected In Discounted Valuation - Hold

(5min)

Summary

  • Ballard Power Systems reported first quarter 2025 results slightly below expectations. In addition, weak order intake resulted in backlog declining by almost 10% sequentially.
  • While recent restructuring initiatives have resulted in lower operating expenses and decreased cash usage, free cash flow remains deeply negative.
  • However, at current cash burn levels, Ballard Power should make it into the next decade without the requirement to raise additional capital.
  • Given the challenging market environment and persistently negative gross margins, it is difficult to envision a near-term catalyst for the stock.
  • However, concerns are well reflected in BLDP's deeply discounted valuation. With the stock currently trading at a 25% discount to Ballard Power's cash balance, I am reiterating my "Hold" rating.
  • 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 »

Fuel cell bus on the hydrogen filling station

Scharfsinn86/iStock via Getty Images

I have covered Ballard Power Systems Inc. (NASDAQ:BLDP) (TSX:BLDP:CA) previously, so investors should view this as an update to my earlier articles on the company.

On Tuesday, leading Canadian fuel cell systems developer Ballard Power Systems Inc. ("Ballard" or "Ballard

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This article was written by

20.06K 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.

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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