
FuelCell Energy (FCEL)
We’re skeptical of FuelCell Energy. Its sales have recently flopped and its historical cash burn means it has few resources to reignite growth.― StockStory Analyst Team
1. News
2. Summary
Why We Think FuelCell Energy Will Underperform
Founded in 1969, FuelCell Energy (NASDAQ: FCEL) is a leading manufacturer and developer of carbonate fuel cell technology for stationary power generation.
- Negative 20.1% gross margin means it loses money on every sale and must pivot or scale quickly to survive
- Historical operating margin losses have deepened over the last five years as it prioritized growth over profits
- Limited cash reserves may force the company to seek unfavorable financing terms that could dilute shareholders
FuelCell Energy doesn’t meet our quality standards. We believe there are better businesses elsewhere.
Why There Are Better Opportunities Than FuelCell Energy
High Quality
Investable
Underperform
Why There Are Better Opportunities Than FuelCell Energy
At $6.07 per share, FuelCell Energy trades at 0.6x forward price-to-sales. The market typically values companies like FuelCell Energy based on their anticipated profits for the next 12 months, but it expects the business to lose money. We also think the upside isn’t great compared to the potential downside here - there are more exciting stocks to buy.
It’s better to invest in high-quality businesses with strong long-term earnings potential rather than to buy lower-quality companies with open questions and big downside risks.
3. FuelCell Energy (FCEL) Research Report: Q1 CY2025 Update
Carbonate fuel cell technology developer FuelCell Energy (NASDAQ:FCEL) reported revenue ahead of Wall Street’s expectations in Q1 CY2025, with sales up 66.8% year on year to $37.41 million. Its GAAP loss of $1.79 per share was 25.5% below analysts’ consensus estimates.
FuelCell Energy (FCEL) Q1 CY2025 Highlights:
- Revenue: $37.41 million vs analyst estimates of $32.7 million (66.8% year-on-year growth, 14.4% beat)
- EPS (GAAP): -$1.79 vs analyst expectations of -$1.43 (25.5% miss)
- Adjusted EBITDA: -$19.31 million vs analyst estimates of -$16.14 million (-51.6% margin, 19.7% miss)
- Operating Margin: -95.7%, up from -184% in the same quarter last year
- Backlog: $1.26 billion at quarter end, up 18.7% year on year
- Market Capitalization: $118 million
Company Overview
Founded in 1969, FuelCell Energy (NASDAQ: FCEL) is a leading manufacturer and developer of carbonate fuel cell technology for stationary power generation.
The company focuses on designing, manufacturing, and selling fuel cell power plants for distributed power generation, offering products ranging from 250 kW to 3 MW in capacity. FuelCell Energy's primary technology is the Direct FuelCell (DFC), which generates electricity directly from a hydrocarbon fuel by reforming it inside the fuel cell to produce hydrogen.
FuelCell Energy's products are designed to meet the power requirements of various customers, including utilities, industrial facilities, data centers, and other commercial and institutional buildings. The company's fuel cells offer several advantages over traditional power generation methods, including higher fuel efficiency, lower emissions, and the ability to use multiple fuel sources such as natural gas, biogas, and coal gas.
FuelCell Energy operates a manufacturing facility in Torrington, Connecticut, with a production capacity of 50 MW per year. The company has plans to expand this capacity to 150 MW within its current facility and potentially up to 400 MW with additional land access. FuelCell Energy also maintains a testing and conditioning facility in Danbury, Connecticut, capable of processing 50 MW of fuel cell power plants annually.
FuelCell Energy's financial performance has historically been heavily dependent on government funding. The company is working to transition towards more commercial sales as its products move closer to widespread market adoption.
4. Renewable Energy
Renewable energy companies are buoyed by the secular trend of green energy that is upending traditional power generation. Those who innovate and evolve with this dynamic market can win share while those who continue to rely on legacy technologies can see diminishing demand, which includes headwinds from increasing regulation against “dirty” energy. Additionally, these companies are at the whim of economic cycles, as interest rates can impact the willingness to invest in renewable energy projects.
Competitors of FuelCell Energy include Bloom Energy Corporation (NYSE: BE), Plug Power (NASDAQ:PLUG), and Ballard Power Systems (NASDAQ: BLDP).
5. Sales Growth
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, FuelCell Energy’s sales grew at an excellent 13.4% compounded annual growth rate over the last five years. Its growth beat the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. FuelCell Energy’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 9.4% over the last two years. FuelCell Energy isn’t alone in its struggles as the Renewable Energy industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.
We can dig further into the company’s revenue dynamics by analyzing its backlog, or the value of its outstanding orders that have not yet been executed or delivered. FuelCell Energy’s backlog reached $1.26 billion in the latest quarter and averaged 6.2% year-on-year growth over the last two years. Because this number is better than its revenue growth, we can see the company accumulated more orders than it could fulfill and deferred revenue to the future. This could imply elevated demand for FuelCell Energy’s products and services but raises concerns about capacity constraints.
This quarter, FuelCell Energy reported magnificent year-on-year revenue growth of 66.8%, and its $37.41 million of revenue beat Wall Street’s estimates by 14.4%.
Looking ahead, sell-side analysts expect revenue to grow 38.3% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and suggests its newer products and services will catalyze better top-line performance.
6. Gross Margin & Pricing Power
FuelCell Energy has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a negative 20.1% gross margin over the last five years. That means FuelCell Energy lost $20.08 for every $100 in revenue.
This quarter, FuelCell Energy’s gross profit margin was negative 25.2%. The company’s full-year margin was also negative, suggesting it needs to change its business model quickly.
7. Operating Margin
FuelCell Energy’s high expenses have contributed to an average operating margin of negative 114% over the last five years. Unprofitable industrials companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.
Looking at the trend in its profitability, FuelCell Energy’s operating margin decreased by 18.3 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. FuelCell Energy’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q1, FuelCell Energy generated a negative 95.7% operating margin. The company's consistent lack of profits raise a flag.
8. Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Although FuelCell Energy’s full-year earnings are still negative, it reduced its losses and improved its EPS by 18.7% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For FuelCell Energy, its two-year annual EPS growth of 12% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.
In Q1, FuelCell Energy reported EPS at negative $1.79, up from negative $2.18 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street expects FuelCell Energy to improve its earnings losses. Analysts forecast its full-year EPS of negative $7.41 will advance to negative $4.94.
9. Cash Is King
Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.
FuelCell Energy’s demanding reinvestments have drained its resources over the last five years, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 136%, meaning it lit $135.71 of cash on fire for every $100 in revenue.
Taking a step back, we can see that FuelCell Energy’s margin dropped by 41.3 percentage points during that time. Almost any movement in the wrong direction is undesirable because it is already burning cash. If the trend continues, it could signal it’s becoming a more capital-intensive business.

10. Balance Sheet Assessment
One of the best ways to mitigate bankruptcy risk is to hold more cash than debt.

FuelCell Energy is a well-capitalized company with $177 million of cash and $150.4 million of debt on its balance sheet. This $26.55 million net cash position is 22.5% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.
11. Key Takeaways from FuelCell Energy’s Q1 Results
We were impressed by how significantly FuelCell Energy blew past analysts’ revenue expectations this quarter. On the other hand, its EPS and EBITDA fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded up 5.2% to $5.47 immediately after reporting.
12. Is Now The Time To Buy FuelCell Energy?
Updated: June 14, 2025 at 11:47 PM EDT
Are you wondering whether to buy FuelCell Energy or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.
FuelCell Energy isn’t a terrible business, but it doesn’t pass our quality test. Although its revenue growth was impressive over the last five years and is expected to accelerate over the next 12 months, its declining operating margin shows the business has become less efficient. And while the company’s projected EPS for the next year implies the company’s fundamentals will improve, the downside is its cash profitability fell over the last five years.
FuelCell Energy’s forward price-to-sales ratio is 0.6x. The market typically values companies like FuelCell Energy based on their anticipated profits for the next 12 months, but it expects the business to lose money. We also think the upside isn’t great compared to the potential downside here - there are more exciting stocks to buy.
Wall Street analysts have a consensus one-year price target of $7.38 on the company (compared to the current share price of $6.07).
Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.