Is it time to invest in FuelCell stock as shares bounce back from post-earnings decline?

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 Jan 1, 2022
  • FuelCell Energy shares on Thursday spiked more than 4%, trimming the post-earnings decline.
  • The stock plunged more than 14% on Wednesday after announcing its most recent quarterly results.
  • FuelCell missed analyst expectations on FQ4 revenue and earnings.

On Thursday, FuelCell Energy Inc. (NASDAQ:FCEL) shares bounced back by more than 4%, trimming Wednesday’s sharp post-earnings decline. The company announced its most recent quarterly results Wednesday before markets opened, missing the consensus for analyst expectations on revenue and earnings.

FuelCell posted FQ3 GAAP earnings per share of -$0.07, missing the average analyst estimate of -$0.03. On the other hand, revenue for the quarter plunged by 18% from the same quarter a year ago to $13.94 million, missing the consensus Street forecast by $7.61 million.

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The stock is now down nearly 81% from its yearly high of $27.96 achieved on the 9th of February.

Is FuelCell overvalued?

From an investment perspective, FuelCell shares trade at a steep price-sales ratio of 26.66, making the stock too expensive for value investors.

However, analysts are optimistic about its earnings potential. They expect its bottom line to improve by a whopping 77% this year before rising by a further 36.70% next year.

Therefore, the stock could be an exciting option for growth investors willing to overlook the short-term turbulence.

Source – TradingView

Technically, FuelCell shares seem to be trading within a descending channel formation in the intraday chart. As a result, the stock has fallen into the oversold conditions of the 14-day RSI.

Therefore, investors could target extended rebound profits at about $6.55, or higher at $7.98, while $3.78 and $2.40 are crucial support zones.

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