Plug Power (PLUG)

Fuel cell technology Plug Power (NASDAQ:PLUG) met Wall Streets revenue expectations in Q3 CY2025, with sales up 1.9% year on year to $177.1 million. Its non-GAAP loss of $0.12 per share was 8.2% above analysts’ consensus estimates.

Company Overview

Powering forklifts for Walmart’s distribution centers, Plug Power (NASDAQ:PLUG) provides hydrogen fuel cells used to power electric motors.

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 Plug Power include Ballard Power Systems (NASDAQ:BLDP), FuelCell Energy (NASDAQ:FCEL), and Bloom Energy (NYSE:BE).

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Plug Power grew its sales at an incredible 17.1% compounded annual growth rate. 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. Plug Power’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 12.8% over the last two years.

This quarter, Plug Power grew its revenue by 1.9% year on year, and its $177.1 million of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 25.3% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and implies its newer products and services will catalyze better top-line performance.

Gross profit margin is a critical metric to track because it sheds light on its pricing power, complexity of products, and ability to procure raw materials, equipment, and labor.

Plug Power has bad unit economics for an industrials business, signaling it operates in a competitive market. As you can see below, it averaged a negative 66.8% gross margin over the last five years. That means Plug Power lost $66.76 for every $100 in revenue.

This quarter, Plug Power’s gross profit margin was negative 67.9%. The company’s full-year margin was also negative, suggesting it needs to change its business model quickly.

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

Plug Power’s high expenses have contributed to an average operating margin of negative 195% 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.

On the plus side, Plug Power’s operating margin rose over the last five years, as its sales growth gave it operating leverage. Still, it will take much more for the company to reach long-term profitability.

This quarter, Plug Power generated a negative 197% operating margin.

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.

Plug Power’s earnings losses deepened over the last five years as its EPS dropped 31.8% annually. We’ll keep a close eye on the company as diminishing earnings could imply changing secular trends and preferences.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Plug Power, its two-year annual EPS growth of 18.5% was higher than its five-year trend. Its improving earnings is an encouraging data point, but a caveat is that its EPS is still in the red.

In Q3, Plug Power reported adjusted EPS of negative $0.12, up from negative $0.24 in the same quarter last year. This print beat analysts’ estimates by 8.2%. Over the next 12 months, Wall Street expects Plug Power to improve its earnings losses. Analysts forecast its full-year EPS of negative $1.00 will advance to negative $0.37.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Plug Power’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 176%, meaning it lit $175.78 of cash on fire for every $100 in revenue.

Taking a step back, an encouraging sign is that Plug Power’s margin expanded during that time. In light of its glaring cash burn, however, this improvement is a bucket of hot water in a cold ocean.

Plug Power burned through $127.3 million of cash in Q3, equivalent to a negative 71.9% margin. The company’s cash burn slowed from $234.2 million of lost cash in the same quarter last year.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Plug Power’s five-year average ROIC was negative 36.2%, meaning management lost money while trying to expand the business. Its returns were among the worst in the industrials sector.

As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.

Plug Power burned through $659.2 million of cash over the last year, and its $598.3 million of debt exceeds the $165.9 million of cash on its balance sheet. This is a deal breaker for us because indebted loss-making companies spell trouble.

Unless the Plug Power’s fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns.

We remain cautious of Plug Power until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet.

It was good to see Plug Power beat analysts’ EPS expectations this quarter. We were also happy its revenue was in line with Wall Street’s estimates. Overall, this print had some key positives. The stock traded up 1.3% to $2.59 immediately following the results.

Updated: December 3, 2025 at 10:52 PM EST

Before making an investment decision, investors should account for Plug Power’s business fundamentals and valuation in addition to what happened in the latest quarter.

Plug Power is a pretty decent company if you ignore its balance sheet. First off, its revenue growth was exceptional over the last five years and is expected to accelerate over the next 12 months. And while Plug Power’s relatively low ROIC suggests management has struggled to find compelling investment opportunities, its rising cash profitability gives it more optionality.

Plug Power’s forward price-to-sales ratio is 3x. All that said, we aren’t investing at the moment because its balance sheet makes us balk. We recommend investors interested in the company wait until it reduces its leverage or increases its profits before getting involved.

Wall Street analysts have a consensus one-year price target of $2.79 on the company (compared to the current share price of $2.22).