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Why You Should not Bet on Ballard Power Systems

July 25, 2014 | About:

Ballard Power Systems (NASDAQ:BLDP) is more buildup than substance. In spite of the fact that the fuel cell company has picked up around 160% not long from now, it may not have the capacity to keep developing for long. Ballard's development will be shortened by the way that fuel cells may not discover much reception going ahead. How about we examine the reasons why Ballard may battle.

The company's Telecom Backup Power framework shipments were low in the past quarter, which brought about a decrease in income and gross margin. Speculators may get deceived by the load of Ballard Power, which is down more than half since its crest in March, yet it is excessively pricey. The company at present is exchanging at almost seven times income, which is a high various. This numerous is particularly outlandish in light of the fact that Ballard is still not beneficial. While the company hopes to enhance its productivity, it is no place close to legitimizing a stock value equivalent to seven times income.

Wagering on fuel cell is not a decent thought

Ballard is wagering on its fuel cell technology, which is not liable to drive in much benefit in view of numerous reasons. The one thing that supports this technology is the utilization of biogas as a modest fuel. While this is a decent alternative for Ballard Power Systems to make the best out of a waste item, it may not end up being the best for a rapid development.

Fuel cells still are much costlier on account of the high capital expenses for their establishment and their in advance working expenses. Biogas, being the least expensive wellspring of common gas which is utilized for fuel cells, is gotten from wastewater treatment plants, landfills, ranches, and so on. In this way, Ballard has been creating routes for its items to run on biogas in order to benefit the profits of this shoddy feedstock. Despite the fact that, not all wellsprings of biogas are financially achievable, its financial plausibility for fuel cells is even less. A few sources wouldn't even create expected income utilizing fuel cells or gas turbines.


Ballard, as well as even its rivals like Plug Power (NASDAQ:PLUG) and Fuelcell Energy (NASDAQ:FCEL) are utilizing biogas as a feedstock for fuel cells. The principle focus of these organizations is to cut down the leveled expense of energy for these frameworks, which will help them catch a bigger offer of the biogas market and to contend in the common gas advertise also.

The conflicting execution of these organizations through the years is a matter of disarray for speculators. Prior, Fuelcell Energy's arrangement with POSCO took it to the top, and not long from now it was Plug Power's arrangement with Wal-Mart that drove speculators frantically into fuel cell stocks. Ballard confronts intense rivalry. At the point when taking a gander at the long haul income patterns of these three organizations, just Fuelcell has been indicating noteworthy development, which additionally isn't much excessively productive.

Economics aren't correct

Fuel cells are presently not temperate, and regardless of the possibility that later on they create appropriation, it is doubtlessly going to turn out awful for organizations like Plug Power, Ballard Power Systems, and Fuelcell Energy as they would strive for productivity and offer weakening. In this way, financial specialists are a strict "no go" for Ballard.

Drawback of fuel cells make Ballard an offer

While Ballard financial specialists have a tendency to accept that hydrogen fuel cells are the fate of producing energy, it still has various drawbacks which will confine its organization. These hindered are:

1) Expensive: Although hydrogen is promptly accessible, the procedure of differentiating hydrogen from different components is unreasonable. It's being utilized to power a couple of half breed autos, however because of the lavish creation cost, it is not a down to earth wellspring of fuel yet.

2) Storage: Unlike other fossil fuels, hydrogen is exceptionally hard to transport, which makes putting away it extremely costly and unfeasible.

3) Flammable: Apart from being hard to transport, hydrogen is additionally a perilously combustible gas, which makes transportation and capacity considerably more troublesome. Besides, hydrogen gas is compacted into fluid structure keeping in mind the end goal to utilize it as a fuel. Subsequently, it must be held under a suitably low temperature keeping in mind the end goal to keep it in fluid structure.

4) High Infrastructure cost: Deployment of hydrogen fueling station is most likely the greatest boundary. The expense of setting up a hydrogen refueling station is cosmically high, and in the event that you include the expense of transportation and stockpiling to it, its use gets to be totally unrealistic.

Thus, despite the fact that hydrogen is incomprehensibly copious and is a cleaner wellspring of energy, it doesn't appear to be likely that it will supplant fossil fuels within a brief period of time. Ballard's stock cost has been really unstable and despite the fact that it has fallen essentially, regardless it looks bloated. With a P/S proportion of in excess of 8.1, Ballard Powers resembles a calamity holding up to happen.

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