Ballard Power Systems Inc. (BLDP) designs, manufactures, and sells proton exchange membrane fuel cell products. The company offers heavy duty modules and fuel cell stacks to transit bus, automotive, rail, truck, material handling, UAV, marine, and critical infrastructure markets. BLDP’s business growth in the heavy-duty motive market should bolster the demand for its services substantially in the near future.
According to the IEA Hydrogen analysis report 2020, the United States remains the world's leader in fuel cell EV stock, followed by China, Japan, and Korea. Strict government regulations aimed at reducing pollution levels, along with enhanced fuel cell efficiency, should propel the growth of fuel-cell market going forward. With the Chinese, European, and American markets pushing hard for fuel cell-powered vehicles, BLDP’s presence in all these areas makes it well positioned to grow significantly, we believe.
BLDP’s strong efforts to bolster its technology solution services and its growing power-products market have driven its 210.6% gain over the past year. This impressive performance, combined with several other factors, has helped BLDP earn a “Strong Buy” rating in our proprietary rating system.
Here is how our proprietary POWR Ratings system evaluates BLDP:
Trade Grade: A
BLDP is currently trading above its 50-day and 200-day moving averages of $17.86 and $14.27, respectively, indicating that the stock is in an uptrend. Also, the stock has gained 33.1% over the past three months, reflecting solid short-term bullishness.
BLDP’s revenue has increased 3.8% year-over-year to $25.62 million in the third quarter ended September 30, 2020. The revenue increase was attributable primarily to a significant increase in heavy-duty motive and technology solution services provided by the company.
On December 17, BLDP announced a purchase order for 10 fuel cell modules to power Van Hool A330 buses in Holland. This will enable BLDP to advance the commercialization of fuel cells in public transportation and continue to expand its market throughout the EU.
On December 14, the company announced a collaboration agreement with Eltek Nordic to provide fuel cell backup power systems for communications networks in the Nordic countries. This will help BLDP deliver uninterrupted power supply for telecom and other networks in the Nordic market.
Buy & Hold Grade: A
In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade considers, BLDP is well positioned. The stock is trading just 3.2% below its 52-week high of $21.89, which it hit on December 18.
The company’s net revenue grew at a CAGR of 17.7% over the past five years. This can be attributed to continued investments in next-generation products and technology, and production-capacity expansion.
Peer Grade: C
BLDP is currently ranked #10 of 59 stocks in the Industrial - Equipment industry. Other popular stocks in this industry are Plug Power, Inc. (PLUG), Fastenal Company (FAST) and HD Supply Holdings, Inc. (HDS)
While PLUG outran BLDP by gaining 990.5% over the past year, FAST and HDS returned 33.9% and 40.3%, respectively, over this period.
Industry Rank: B
The Industrial - Equipment industry is ranked #54 of the 123 StockNews.com industries. The companies in this industry offer precision parts, fuel cell products, and systems for applications serving various customers in end-markets, such as transportation, industrial equipment, consumer products, packaging, electronics, medical devices, and energy, as well as personal care/health care industries.
With more countries adopting stringent regulations to reduce increasing pollution levels, fuel cell infrastructures should witness notable growth. Increasing fuel-cell applications in the transport sector such as in cars and buses is expected in the coming years.
Overall POWR Rating: A (Strong Buy)
BLDP is rated “Strong Buy” due to its impressive financials, short and long-term bullishness, solid price momentum, and underlying industry strength, as determined by the four components of our overall POWR Rating.
Bottom Line
We think BLDP has plenty of upside left despite gaining 210.6% over the past year. The increasing adoption of hydrogen-based backup power fuel cell stacks and the competitive advantages of fuel cell products, such as enhanced efficiency, eco-friendliness, and longer life spans compared to others, are expected to significantly drive BLDP’s revenue in the coming months.
The consensus EPS estimate for the next quarter ending March 31,2021 indicates a 50% improvement year-over-year. The consensus revenue estimate of $29.17 million for the next quarter indicates a 21.5% increase from the same period last year.
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BLDP shares were trading at $20.65 per share on Monday morning, down $0.53 (-2.50%). Year-to-date, BLDP has gained 187.60%, versus a 14.52% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization.
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