• Plug Power stock down 24% year-to-date ahead of Q3 report
  • Q3 revenue and earnings expected above estimates
  • The focus will be on cost mitigation efforts and clean energy

Plug Power Inc. (NASDAQ: PLUG) is scheduled to deliver its Q3 2021 results on November 9, 2021, after the market closes. The company heads into the earnings session with its sentiments and prospects, having received a significant boost with the passing of a landmark $1.2 trillion infrastructure bill that includes spending on clean energy.

Chart showing Plug Power price action

The stock has been on a rollercoaster ride for the better part of the year. While it is down by about 24% year to date, it has underperformed the overall market, with the S&P 500 up by more than 20% for the year. However, over the past month, Plug Power has been in fine form, rallying by more than 60% after bottoming out from 2021 lows.

Plug Power sentiments have improved significantly following the signing of multiple deals and the aggressive efforts the company has made in expanding its hydrogen footprint. The company has already collaborated with aerospace giants and partnered to build an electrolyzer factory in Australia. It has also partnered to build the largest hydrogen plant in California.

The wave of deals all but affirms Plug Power’s push to expand its target market beyond the niche market of fuel cell forklifts. The passing of the US infrastructure deal is another important development for the company. The bill includes about $7.5 billion spending on zero and low emission busses and ferries and $7.5 billion on electric vehicle charging infrastructure. Plug Power is one of the big players in the clean energy space.

The alternative energy company heads into the earnings session amid expectations it will deliver better than expected earnings on higher revenues. However, the company has only delivered better than expected results once in the last four quarters, having missed estimates thrice.

Q3 earnings expectations

Wall Street expects Plug Power to post revenue of $144.18 million, representing a 16% year-over-year increase and a 35% increase sequentially. Revenues in the second quarter were up 83.2% year-over-year to $124.56 million, exceeding the consensus estimate of $111.21 million.

It is highly expected that supply chain issues compounded by an increase in labor and raw material costs are likely to impact the company’s margins and profitability negatively. However, analysts expect the company to post an adjusted loss per share of $0.08 which will be much narrower compared to a loss of $0.18 a share delivered the same quarter last year.

In the second quarter, Plug Power delivered a wider than expected net loss of $0.18 compared to a loss per share of $0.07 that analysts expected

What to look out for when Plug Power reports

When Plug Power reports, the focus will be on whether the alternative energy company benefited from the growing adoption of cell solutions. In addition, there has been growing popularity of hydrogen stations, waiting to see its impact on its earnings.

The company boasts of a solid product portfolio. Consequently, it will be interesting to see if it did succeed in enhancing its global presence, having inked multiple strategic partnerships. The deals are expected to be of significant benefit in driving the bottom line.

Amid the strategic partnerships and expansion drive, rising costs have been a point of concern in recent quarters. In the first six months of the year, the cost of sales increased by over 100% year-over-year as operating expenses jumped 101.7%. It will be interesting to see the efforts put in place to avert costs getting out of hand as they are likely to continue hurting earnings.

Bottom line

Plug Power is poised to deliver Q3 results at a time its stock has bounced back after a sell-off from all-time highs. The bounce-back has been fuelled by improving industry fundamentals. Consequently, better than expected results should affirm the company’s growth metrics and long-term metrics likely to fuel another leg higher. A disappointing report could spook the market and trigger a pullback.