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Why Plug Power (PLUG) Stock Is Soaring

Tickers in this article: PLUG

NEW YORK ( TheStreet) --  Plug Power  is soaring on the news the fuel-cell supplier has signed another major deal.

By midafternoon Tuesday, shares had surged 33.2% to $7.58.

Trading volume of 61.7 million shares had exceeded its three-month daily average of 60.9 million.

In an interview with MarketWatch, CEO Andy Marsh said the alternative energy company is planning to announce its next major deal, this time with a global automaker, in the next few weeks.

Plug Power shares have been yo-yoing since February when the company announced a multi-site GenKey purchase order from Walmart . Plug Power's deal will see it rolling out hydrogen fuel 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.

Then, a bearish report from Citron Research in mid-March sent shares into a tailspin. In the research report, Citron analysts noted Plug Power would be fairly valued at 50 cents, a blended average of recent capital raises, and warned that management's guidance is a "history of broken promises and failure to deliver."

Despite the steep drop that followed that report, shares have managed to climb 387.1% since the beginning of the year.

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

"We rate PLUG POWER INC (PLUG) a SELL. This is driven by a few notable 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 weak operating cash flow."

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 240.8% when compared to the same quarter one year ago, falling from -$8.47 million to -$28.88 million.
  • Net operating cash flow has significantly decreased to -$8.94 million or 93.52% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • PLUG POWER INC's earnings per share declined by 27.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PLUG POWER INC continued to lose money by earning -$0.79 versus -$0.94 in the prior year. This year, the market expects an improvement in earnings (-$0.09 versus -$0.79).
  • Compared to its closing price of one year ago, PLUG's share price has jumped by 2958.45%, exceeding the performance of the broader market during that same time frame. 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.
  • The revenue growth greatly exceeded the industry average of 5.5%. Since the same quarter one year prior, revenues rose by 35.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.

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