Stock Preacher

FuelCell Energy Inc. (NASDAQ: FCEL)

FuelCell Energy Inc. (FCEL) engages in the development and production of stationary fuel cell power plants for ultra-clean power generation. The Company’s Direct FuelCell® (DFC) power plants, which are offered to commercial, industrial, municipal and utility customers, operate on a variety of fuels including methane from biogas, waste gas from industrial processes, and natural gas.

FCEL’s power plants range in output from 300 kilowatts (kW) up to 2.4 megawatts (MW), scalable up to 50 MW. To date, these DFC units have generated more than 230 million kW hours of electricity in many regions worldwide, including Europe, Asia and North America.

Founded in 1969 and publicly traded since 1992, the Company has grown to become a leader in fuel cell technology. It is headquartered in Danbury, Connecticut.

Source: Reuters.com

Financial Summary

FCEL’s revenue declined to $23.0 million for the third quarter of fiscal 2009, compared to $27.9 million for the year-ago quarter. Against the backdrop of difficult credit markets and delays in capital spending, which negatively impacted activity in the U.S., product sales and revenues for the recent quarter came in at $18.7 million, versus $23.2 million in the third quarter of 2008. Meanwhile, its research and development contract revenue declined to $4.3 million, as compared to last year’s $4.7 million. Net loss to common shareholders was $15.7 million, a 41% improvement from last year’s net loss $26.8 million, while cost-to-revenue ratio improved to 1.40 from 1.68 a year ago.

As of July 31, 2009, FCEL had product backlog, including long-term service agreements, of $104.8 million, versus $100.7 million reported as of July 31, 2008. Research and development contract backlog totaled $15.3 million compared to $5.5 million as of July 31, 2008.

For the nine months ended July 31, 2009, the Company reported sales and revenue of $67.6 million, a 9.4% decrease from the previous year, with product sales and revenues declining from $59.4 million in 2008 to $57.1 million for the recent nine months. On the other hand, net loss for the nine-month period was $56.3 million, a 22% improvement from last year’s net loss of $72.3 million, while product cost-to-revenue ratio improved to 1.47 from 1.65, reflecting lower per unit production costs and the transition in product mix to primarily megawatt-class power plants.

Source: Reuters.com

Analyst Consensus

In recent poll, analysts expect shares of FCEL to “Outperform.” This is the consensus forecast among 11 polled investment analysts:

Source: Reuters.com

Investment Highlights

FCEL engages in the development of fuel-cell technology and the commercialization of stationary fuel-cell power plants. The Company’s Direct FuelCell® (DFC) power plants offer ultra-clean, efficient and reliable power. FCEL’s ultra-clean stationary fuel-cell power plants generate electricity with up to twice the efficiency of conventional fossil fuel plants, and with virtually no air pollution. These units operate on a variety of fuels, including methane from biogas, waste gas from industrial processes, and natural gas, and are well suited to a wide variety of commercial and industrial applications.

The Company recently announced it produced the latest cost-reduced fuel-cell modules, which according to FCEL chairman and CEO R. Daniel Brdar, is an important milestone on the path to profitability. According to Brdar, the fuel cells generate more power and reduce cost for each unit.

The Company has begun production of its cost-reduced, higher output models incorporating 350 kW stacks, lower-cost materials, and improved manufacturing techniques during the third quarter. According to the report, the new DFC1500 puts out 1.4 MW of power and the DFC3000 generates 2.8 MW, both expected to be gross margin profitable on a per unit basis.

Brdar also reported that the Company achieved its highest sales volume ever in a single quarter, with 32 MW combined orders from Sonoma County and POSCO Power. POSCO operates in South Korea where ultra-clean, highly efficient fuel cell power plants meet the country’s demand for clean energy generation. South Korea has reportedly committed 2% of its gross national product to clean energy projects. FCEL reported that POSCO Power has ordered 68 MW of megawatt-class fuel cell products to date for its customers in South Korea and 12 MW of these are now operating at customer sites.

In California, the Company reported that Aircon Energy ordered a 1.4 MW power plant for Sonoma County. With California as its leading market for renewable wastewater and food processing applications, FCEL said it is working with several wastewater treatment facilities in the state that are awaiting notice of award for Department of Energy (DOE) combined heat and power grants.

In Connecticut, FCEL reported that it is in discussions with project developers and financiers for the 43.5 MW of fuel cell projects approved under Connecticut’s Renewable Portfolio Standards (RPS).

On September 15, it was reported that the Company was awarded approximately $1.9 million in government funding for the development of a microchannel high temperature recuperator for fuel cell systems. According to the Company, the program is aimed at improving the performance and cost of fuel cell power plants that are integrated with unfired gas turbines in combined cycle applications.

Christopher Bentley, FCEL executive vice president, said that the award is the first of several the Company hopes to win under the American Recovery and Reinvestment Act (ARRA) of 2009. ARRA, which allocates more than $30 billion for energy-related projects that include energy efficiency, new clean technologies, and a strong, reliable grid infrastructure, was intended to provide a stimulus to the U.S. economy in the wake of the economic downturn.

On top of this recently announced ARRA-funded project, FCEL is also developing coal-based solid oxide fuel cell systems under a $30 million Department of Energy agreement.

Technical Analysis

Source: http://stockcharts.com/h-sc/ui

As of last close on September 15, 2009, FCEL closed at $3.92, 97.98% above the 52-week low of $1.98 set on March 06, 2009.

FCEL’s MACD is currently indicating a weak bullish signal. Although the MACD is trending above the signal line, the indicator is still below 0, which suggests that the underlying moving averages are bearish.

With share prices currently above the penny stock’s 13-day moving average, an indication of a bullish trend is generally considered.

Trading within its Bollinger Bands, the small cap stock reflects neither an overbought nor oversold condition relative to its recent price trend.

Comparative Analysis

Source: Yahoo! Finance, Analyst Estimates.

Insider Trading Activity

NET SHARE PURCHASE ACTIVITY

Data provided by Thomson Financial

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