Plug Power shares rise despite earnings miss: should you buy or sell?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Aug 6, 2021
  • Plug Power shares edged slightly higher on Friday despite missing analyst expectations on earnings.
  • PLUG stock rose more than 5% in the early hours before easing to trim intraday gains.
  • The company issued strong billings guidance for the year on growing electrolyzer business.

Plug Power Inc. (NASDAQ:PLUG) shares, Friday surged more than 5% before easing later to trim intraday gains. The company posted weaker-than-expected earnings per share despite smashing expectations on revenue. Plug Power also issued upbeat guidance on gross billings amid its rapidly growing electrolyzer business.

Plug Power’s GAAP EPS of -$0.18 missed expectations by $0.11 while revenue grew 83% year-over-year to $124.56 million, $13.35 million better than the consensus Street estimate.

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The company wrote:

Growth in the electrolyzer business is estimated to be up over 400% in 2021 versus 2020 and expected to continue to grow at robust levels through 2024.

Several analysts have a buy rating on PLU shares, with RBC analyst Joe Spak encouraged by the upbeat billings guidance. Spak also cited the company’s forklift products as growth catalysts and expects bottom line struggles to end soon as margins continue to grow.

Cowen and Citi think the company is well-positioned for long-term growth, giving the stock a buy rating.

Should you buy Plug Power shares now?

Although Plug Power is yet to swing to profits in the trailing 12-months, analysts expect the bottom line to improve next year, growing by 39.30%. However, this year’s earnings decline forecast of more than 365% could still put some investors off.

Therefore, it could be best to wait and see how its earnings respond to improving margins before betting heavily on next year’s growth.

From a valuation perspective, PLUG stock trades at a price-book value of about 2.71 and a price-cash ratio of 3.10. Therefore, some value investors may see it as an opportunity to invest before the price bounced off from the current levels.

Source – TradingView

Technical overview: Plug Power stock price predictions for Q3 2021

Technically, Plug Power shares appear to have pulled back after spiking early on Friday. As a result, the stock now trades slightly below the 100-day moving average in the intraday chart. 

Therefore, investors can target potential rebound profits at approximately $33.80 or higher at $41.66, while the critical support levels are $19.19 and $11.17.

Bottom line: the case for buying Plug Power rebound

In summary, although PLUG earnings per share could decline significantly this year, analysts are optimistic about a rebound next year. In addition, the company is upbeat about long-term growth expectations, making it an exciting option for patient investors. 

Therefore, PLUG is an attractive stock to investors looking to buy the short-term rebound and those willing to overlook this year’s turbulence.

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