Plug Power Inc. (PLUG, Financial) recently recorded a daily loss of -3.14 %, with a 3-month loss of -16.51%. The company's Loss Per Share stands at 1.43. This raises the question: is the stock significantly overvalued? In this article, we aim to provide a detailed analysis of Plug Power's valuation. We encourage you to read on for a comprehensive understanding of the company's financial performance and market value.
A Glimpse Into Plug Power Inc. (PLUG, Financial)
Plug Power is a pioneer in the green hydrogen ecosystem, with operations spanning production, storage, delivery, and energy generation. The company is actively developing green hydrogen highways across North America and Europe. Presently, Plug Power's stock price stands at $8.01, while our estimated fair value (GF Value) for the stock is $3.66. This discrepancy suggests that the stock may be significantly overvalued.
Demystifying GF Value
The GF Value represents our unique estimation of a stock's intrinsic value. It is calculated based on three factors: historical trading multiples, a GuruFocus adjustment factor based on the company's past performance and growth, and future business performance estimates. If the stock price is significantly above the GF Value Line, the stock is likely overvalued and may offer poor future returns. Conversely, if it is significantly below the GF Value Line, the stock is likely undervalued and could promise higher future returns.
Based on our valuation method, Plug Power (PLUG, Financial) appears to be significantly overvalued. With a market cap of $4.80 billion at its current price of $8.01 per share, the stock's future return is likely to be much lower than its future business growth due to this overvaluation.
Financial Strength
Investing in companies with poor financial strength can lead to a higher risk of permanent capital loss. As such, it is crucial to carefully review a company's financial strength before investing. Plug Power has a cash-to-debt ratio of 1.12, which is worse than 51.56% of 2789 companies in the Industrial Products industry. This suggests that Plug Power's financial strength is fair, with a GuruFocus ranking of 6 out of 10.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, usually poses less risk. Plug Power, however, has been profitable 0 times over the past 10 years. The company had a revenue of $879.80 million and a Loss Per Share of $1.43 over the past twelve months. With an operating margin of -88.39%, its profitability ranks worse than 95.54% of 2800 companies in the Industrial Products industry. This indicates poor profitability.
Growth is a crucial factor in a company's valuation. Plug Power's 3-year average revenue growth rate is better than 54.23% of 2672 companies in the Industrial Products industry. However, its 3-year average EBITDA growth rate is -94.2%, which ranks worse than 99.24% of 2363 companies in the Industrial Products industry.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) and its Weighted Average Cost of Capital (WACC) is another way to assess its profitability. For the past 12 months, Plug Power's ROIC stands at -24.37, while its cost of capital is 15.27.
Conclusion
In conclusion, Plug Power (PLUG, Financial) stock appears to be significantly overvalued. The company's financial condition is fair, but its profitability is poor. Its growth ranks worse than 99.24% of 2363 companies in the Industrial Products industry. To learn more about Plug Power stock, you can check out its 30-Year Financials here.
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