Inflation Reduction Act Has Tax Benefits for Clean Energy -- Should You Buy These 2 Fuel Cell Stocks?

On August 16, President Joe Biden signed the Inflation Reduction Act (IRA) into law, which marks the most significant climate bill in the country’s history and has the potential to exponentially curb greenhouse gas emissions (GHG) over the next few years. Through $369 billion earmarked for clean energy and climate change initiatives, the government is expected to be able to reduce GHG emissions to up to 40% (Approx.) compared to 2005 levels by 2030.

Additionally, the IRA extends tax credits for clean energy generation, which should accelerate the deployment of renewable energy and battery storage, benefitting the clean energy sector and propelling fuel cell companies' shares.

However, we think it will not be wise to invest in fundamentally bleak fuel cell stocks Plug Power Inc. (PLUG) and Ballard Power Systems Inc. (BLDP) now.

Plug Power Inc. (PLUG)

PLUG delivers end-to-end clean hydrogen and zero-emissions fuel cell solutions for supply chain and logistics applications, on-road electric vehicles, stationary power market, and others in North America and internationally. 

For the fiscal quarter ended June 30, 2022, PLUG’s gross loss came in at $32.47 million. Operating loss for the period increased 63.9% from the prior-year quarter to $146.91 million, while its net loss increased 73.9% from the same period the prior year to $ 173.30 million.

Street EPS estimate of a negative $0.22 for the fiscal quarter ending September 2022 reflects a 15.6% year-over-year decrease. Also, the EPS estimate stood at a negative $0.95 for the ongoing fiscal year. PLUG missed the consensus EPS estimates in three of the trailing four quarters.

The stock has slumped 38.4% over the past nine months to close the last trading session at $26.86.

PLUG’s POWR Ratings reflect this bleak outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

PLUG has a Sentiment, Stability, and Quality grade of F and a Growth, and Value grade of D. In the 90-stock Industrial - Equipment industry, it is ranked #86. Click here to see the additional POWR Ratings for PLUG (Momentum).

Ballard Power Systems Inc. (BLDP)

Headquartered in Burnaby, Canada, BLDP is engaged in the business of design, development, manufacture, sale, and service of proton exchange membrane (PEM) fuel cell products.

BLDP’s total fuel cell products & services revenue decreased 16% year-over-year to $20.90 million in the fiscal quarter ended June 30, 2022. Adjusted EBITDA decreased 78% from the prior-year period to a negative $35 million. The company’s net loss from continuing operations came in at $55.80 million, up 154.8% from the prior-year period, while its EPS stood at a negative $0.19.

The consensus revenue estimate of $24.18 million for the fiscal first quarter ending September 2022 indicates a 4.1% year-over-year decline. In the same period, the consensus EPS estimate stood at a negative $0.14. BLDP missed the consensus EPS estimates in all the trailing four quarters.

The stock has declined 50.9% over the past year to close the last trading session at $7.52.

It’s no surprise that BLDP has an overall F rating, which translates to Strong Sell in our POWR Ratings system. The stock also has an F grade for Growth and Sentiment and a D for Value, Stability, and Quality. It is ranked #85 in the same industry. To see the additional POWR Ratings for Momentum for BLDP, click here.

PLUG shares were trading at $26.20 per share on Tuesday afternoon, down $0.18 (-0.68%). Year-to-date, PLUG has declined -7.19%, versus a -12.45% rise in the benchmark S&P 500 index during the same period.

Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.

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