Plug Power (PLUG)

Fuel cell technology Plug Power (NASDAQ:PLUG) beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 21.4% year on year to $174 million. Its GAAP loss of $0.20 per share was 32.6% below 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. Thankfully, Plug Power’s 21% annualized revenue growth over the last five years was incredible. Its growth beat the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Plug Power’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 12.6% over the last two years. Plug Power 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.

This quarter, Plug Power reported robust year-on-year revenue growth of 21.4%, and its $174 million of revenue topped Wall Street estimates by 10.4%.

Looking ahead, sell-side analysts expect revenue to grow 23.7% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and indicates its newer products and services will fuel better top-line performance.

At StockStory, we prefer high gross margin businesses because they indicate the company has pricing power or differentiated products, giving it a chance to generate higher operating profits.

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 63.9% gross margin over the last five years. That means Plug Power lost $63.90 for every $100 in revenue.

Plug Power’s gross profit margin was negative 30.7% this quarter. The company’s full-year margin was also negative, suggesting it needs to change its business model quickly.

Plug Power’s high expenses have contributed to an average operating margin of negative 190% 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, Plug Power’s operating margin decreased significantly 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. Plug Power’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.

Plug Power’s operating margin was negative 102% this quarter.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Plug Power’s earnings losses deepened over the last five years as its EPS dropped 48.2% annually. We tend to steer our readers away from companies with falling EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, Plug Power’s low margin of safety could leave its stock price susceptible to large downswings.

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 declines of 22.5% show it’s still underperforming. These results were bad no matter how you slice the data.

In Q2, Plug Power reported EPS at negative $0.20, up from negative $0.36 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast Plug Power’s full-year EPS of negative $2.14 will reach break even.

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 177%, meaning it lit $177.46 of cash on fire for every $100 in revenue.

Taking a step back, we can see that Plug Power’s margin dropped meaningfully during that time. It may have ticked higher more recently, but shareholders are likely hoping for its margin to at least revert to its historical level. Almost any movement in the wrong direction is undesirable because it’s already burning cash. If the longer-term trend returns, it could signal it’s in the middle of a big investment cycle.

Plug Power burned through $230.4 million of cash in Q2, equivalent to a negative 132% margin. The company’s cash burn slowed from $356 million of lost cash in the same quarter last year.

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 $775.8 million of cash over the last year, and its $927 million of debt exceeds the $140.7 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.

We were impressed by how significantly Plug Power blew past analysts’ revenue expectations this quarter. On the other hand, its EBITDA missed and its EPS fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 6% to $1.50 immediately following the results.

Updated: November 8, 2025 at 10:27 PM EST

Are you wondering whether to buy Plug Power or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

Plug Power falls short of our quality standards. Although its revenue growth was exceptional over the last five years, it’s expected to deteriorate over the next 12 months and its declining EPS over the last five years makes it a less attractive asset to the public markets. And while the company’s projected EPS for the next year implies the company’s fundamentals will improve, the downside is its declining operating margin shows the business has become less efficient.

Plug Power’s forward price-to-sales ratio is 3.7x. The market typically values companies like Plug Power 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 $2.78 on the company (compared to the current share price of $2.67).