Key Points
- Bloom Energy’s stock has surged by 62.1% in the last month, outperforming the industry’s decrease of 1.7% and the sector’s growth of 5.2%.
- The company is witnessing strong demand for clean energy and modular energy solutions.
- Bloom Energy’s return on invested capital (ROIC) stands at 5.22%, above the industry average, and it is trading at a forward earnings multiple of 13.02x.
Bloom Energy Co., Ltd. has reported a remarkable 62.1% growth in its stock over the past month, significantly higher than the 1.7% decline in the Zacks Alternative Energy – Other sector. The company has also outperformed the Zacks Oil & Energy sector’s increase of 5.2% as well as the S&P 500’s gain of 1.2% in the same timeframe.
The rise in Bloom’s performance can be attributed to the growing demand for clean electricity, largely driven by AI-centric data centers and a shift towards distributed energy solutions. These solutions effectively bypass limitations associated with transmission and distribution.
Price Performance (1 Month)
Image source: Zacks Investment Research
In contrast, another player in the industry, Talen Energy Co., Ltd. saw a decline of 1.9% during this period.
Bloom Energy is currently trading above its 50-day and 200-day simple moving averages (SMAs), which raises a bullish sentiment. These averages serve as crucial indicators for traders and analysts to identify support and resistance levels, marking the early signs of potential price trends.
BE 50-Day and 200-Day SMA
Image source: Zacks Investment Research
So, is it a good idea to add BE to your investment portfolio just because of its positive price movement? It might be worth delving deeper to examine factors that can influence your decision on whether or not to include BE in your holdings.
Factors Supporting Bloom Energy’s Performance
As the demand for continuous electricity escalates in the U.S., obstacles in extensive transmission projects are limiting options for customers. In this context, Bloom Energy’s Energy Server stands out as a viable alternative, functioning alongside the grid through a direct connection to the customer’s power supply, thereby sidestepping the inefficiencies found in centralized systems. Moreover, BE’s modular design enables scalability, catering to various customer needs from hundreds of kilowatts to megawatts.
Furthermore, Bloom Energy’s modules generate electricity without pollution, utilizing proprietary solid oxide technology for electrochemical fuel conversion, which avoids conventional combustion. This positions Bloom Energy favorably compared to fossil fuel-based power generation.
The commitment to research and development continues to drive operational improvements in Bloom Energy’s modules, contributing to lower production costs and enhancing profit margins.
Additionally, the company is set to launch a new manufacturing facility in California to keep pace with growing demand and is also capitalizing on governmental incentives that promote clean energy production.
Bloom Energy’s Forecasts
The Zacks Consensus predicts Bloom Energy’s earnings per share (EPS) for 2026 will see a year-on-year increase of 78.75%, supported by total revenue growth of 37.74%.
BE Sales Forecast
Image source: Zacks Investment Research
For the long term, Bloom Energy’s profit growth rate is estimated at around 25% over the next 3-5 years.
BE EPS Estimates
Image source: Zacks Investment Research
BE Shows Superior Price/Earnings Ratio
Return on invested capital (ROIC) reflects how efficiently a company generates returns on the capital it has invested. It serves as a critical measure of profitability and operational efficiency, and Bloom Energy’s ROIC indicates that it is using its investment capital more effectively than its counterparts.
In the last 12 months, Bloom Energy’s ROIC at 5.22% has outstripped the industry average of 1.06%.
Image source: Zacks Investment Research
Another player in this space, Ormat Technologies, has a ROIC of 4.45%, which, while decent, falls short of Bloom Energy’s performance.
BE’s Premium Valuation
Currently, Bloom Energy has a high valuation compared to its industry peers, with a trailing 12-month price-to-sales (P/S) ratio of 13.02, while the industry averages at 4.67x.
Image source: Zacks Investment Research
Ormat Technologies is trading at 6.31x, which also reflects a higher-than-average valuation compared to its peers.
Conclusion
Bloom Energy is demonstrating stable performance, fueled by an increasing demand for clean energy and the capacity to deliver on-site power. The need for its services, catering to customer-specific clean energy requirements, appears to be on the rise.
With rising projections, notable price performance, and impressive ROIC that surpasses the industry average, Bloom Energy presents an attractive opportunity for investors. However, considering its current premium valuation, it’s recommended that investors hold their position in this Zacks Rank #3 (Hold) stock.
You can find the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
