Why Plug Power (PLUG) Is Up on Wednesday

Tickers in this article: BLDP FCEL PLUG

NEW YORK ( TheStreet) --  Plug Power  is soaring after announcing a multi-site GenKey purchase order from Wal-Mart . Fellow alternative fuel cell makers FuelCell  and Ballard Power Systems  are being pulled higher, too.

By midmorning, shares of Plug Power have gained 14.4% to $4.46. FuelCell is up 6.6% to $1.79, while Ballard Power Systems has added 11.4% to $3.27.

Plug Power's deal will see it rolling out hydrogen fuell cell solutions to power electric lift truck fleets at six of Wal-Mart's North American distribution centers. The first site will be deployed by the second quarter ending June of 2014.

A total 1,738 GenDrive fuel cell units will be deployed over two years with a six-year GenCare service contract for each site.

"We are pleased with the performance of the hydrogen fuel cells that we have been operating and are excited to expand our program with Plug Power," said Jeff Smith, senior director for Wal-Mart Logistics.

"This agreement is a tripling of Wal-Mart's commitment to Plug Power's fuel cells, and is encouraging because it comes from a company with so much experience using our product," said Andy Marsh, CEO at Plug Power.

Wal-Mart currently has 535 GenDrive fuel cell units in operation at certain refrigerated distribution centers.

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TheStreet Ratings team rates PLUG POWER INC as a Sell with a ratings score of D-. The team has this to say about their recommendation:

"We rate PLUG POWER INC (PLUG) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Electrical Equipment industry. The net income has significantly decreased by 54.0% when compared to the same quarter one year ago, falling from -$10.33 million to -$15.90 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Electrical Equipment industry and the overall market, PLUG POWER INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • PLUG, with its decline in revenue, underperformed when compared the industry average of 7.4%. Since the same quarter one year prior, revenues slightly dropped by 3.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • PLUG's debt-to-equity ratio of 0.85 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.21 is sturdy.
  • This stock has increased by 2518.54% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in PLUG do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.