Despite the high pent-up demand, the EV industry is grappling with significant challenges, such as semiconductor shortage, the dearth of public chargers, and the lack of inputs. Since these factors make the industry’s near-term prospects bleak, it could be wise to avoid fundamentally-weak EV stocks Plug Power (PLUG) and ChargePoint Holdings (CHPT). Let’s discuss….
The electric vehicle (EV) market has been flashing more red flags than green due to various challenges such as supply chain disruptions, semiconductor chip shortages, and high inflation. Despite rising demand and government support, the inadequate charging infrastructure and production challenges weigh heavily on the industry’s growth prospects.
The sorry state of public charging stations in the United States has been depressing EV owners’ sentiments of late. According to the report by consumer insights and data analytics provider J.D. Power, one out of every five respondents ended up not charging their vehicle during their visit to a public charging station. “Of those who didn’t charge, 72% indicated that it was due to the station malfunctioning or being out of service,” the findings showed.
Although the Inflation Reduction Act has spurred investment in EV production, the lack of essential battery materials has been a major hindrance to meeting the demand.
Plug Power Inc. (PLUG)
PLUG is a leading provider of comprehensive hydrogen fuel cell (HFC) turnkey solutions. The company offers end-to-end clean hydrogen and zero-emissions fuel cell solutions for supply chain and logistics applications, on-road electric vehicles, the stationary power market, and more. In addition, it manufactures and sells fuel cell products to replace batteries and diesel generators in stationary backup power applications.
During the second quarter that ended June 30, 2022, PLUG’s total operating expenses increased 131.9% year-over-year to $114.44 million. The company’s operating and net losses widened 63.9% and 73.9% from the year-ago value to $146.91 million and $173.29 million, respectively. Also, its loss per share came in at $0.30, widening 66.7% year-over-year.
PLUG’s EPS is expected to remain negative for fiscal 2022 and decrease 40% per annum over the next five years. It has failed to surpass the consensus EPS estimates in each of the trailing four quarters. The stock has declined 22.2% over the past month and 20.3% year-to-date to close the last trading session at $22.50.
PLUG’s POWR Ratings are consistent with this bleak outlook. The stock’s overall F rating translates to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has an F grade for Stability and Quality and a D for Growth, Value, and Sentiment. It is ranked #86 out of 89 stocks in the Industrial – Equipment industry. To see the PLUG’s rating for Momentum, click here.
ChargePoint Holdings, Inc. (CHPT)
CHPT operates electric vehicle charging networks and charging solutions globally. It offers a portfolio of hardware, software, and services for commercial, fleet, and residential customers. The company has delivered more than 123 million charging sessions year to date, with drivers plugging into its network on average every second.
CHPT’s total operating expenses increased 27.6% year-over-year to $108.52 million in the second quarter that ended July 31, 2022. The company’s loss from operations widened 21.6% year-over-year to $90.37 million. Its non-GAAP net loss widened 53.1% from the prior-year quarter to $61.86 million.
Analysts expect CHPT’s EPS to remain negative for fiscal 2022 and 2023. It failed to surpass the consensus EPS estimate in three of the trailing four quarters. Over the past year, the stock has declined 24% to close the last trading session at $15.83.
CHPT’s weak fundamentals are reflected in its POWR Ratings. It has an overall F rating, equating to a Strong Sell in our proprietary rating system.
It also has an F grade for Value and Stability and a D for Quality. Within the same industry, it is ranked #81. Click here to see the other ratings of CHPT for Growth, Momentum, and Sentiment.
PLUG shares were trading at $20.78 per share on Thursday morning, down $1.72 (-7.64%). Year-to-date, PLUG has declined -26.39%, versus a -22.88% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta’s profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.