Plug Power (PLUG, Financial) reported mixed results for the third quarter. The company posted a good increase in the revenue, but it felt short of analysts’ estimates on earnings. The stock fell as the investors didn’t receive the results positively. But now, it is focusing on various initiatives to improve its profitability in the near term. Let us have a look at how Plug Power is trying to improve its market share.
Looking past the performance
In the recently reported quarter, the company’s revenue grew four times to $19.88 million, but this also fell short of consensus estimates. Analysts had been modeling $24.37 million in revenue. Plug Power also posted a wider than expected loss of $0.04 per share, while analysts’ were expecting $0.03 per share.
Plug Power is losing market share. The stock has fallen terribly in the past year, and it almost touched its all-time low. But, the company thinks that it will get over this weakness. The company is focusing on many strong points, which can be a growth driver for it in the future. It is seeing its current customer base increase as well. Another exciting thing for Plug Power is that some well-known companies such as Newark Farmers Market, BMW and Central Grocers are refreshing their existing GenDrive fleets by reinvesting in the products sold by Plug Power.
Good opportunities ahead
Further, Plug Power is seeing good growth opportunities from its hydrogen business. It expects this segment to add meaningfully to its revenue which will also enhance the margins. Its large scale hydrogen system, known as GenFuel, is seeing good shipments and is expected to improve in the near term. In addition, its turnkey solution, Genkey, is also seeing good adoption. It gives good opportunities in the aftermarket service and support, providing a seamless transition to a hydrogen-powered fleet.
Besides, Plug Power has a strong customer base in which some of the top companies such as Mercedes-Benz, BMW and Volkswagen (VLKAY, Financial) are committed to using Plug Power’s services. This gives Plug Power good opportunities for the future. To further add value to it, Plug Power is planning to install GenFuel infrastructures at these locations with an outdoor liquid hydrogen stacks. These are considered to be wise moves by the company as these will provide operation efficiencies and cost saving to its customer.
Plug Power is pleased with traction it is seeing with its GenFuel offering. The company has also got orders for installation of GenFuel systems at Memphis Airport. Plug Power is expecting this to drive the GSE market forward. Finding these situations profitable, Plug Power has also entered an agreement with Praxair to supply liquid hydrogen for its GenFuel customers.
The company has also entered into a strategic relationship with Ballard Power Systems (BLDP, Financial) for fuel cell stacks. With this relationship, Plug Power seems to have secured its long term prospects as this will provide the company with favourable pricing. This agreement is functional until 2017, which means that the company has strong long-term prospects which can help it to gain further market share.
Further under its long-term strategies, Plug Power is working on developing air-cooled and liquid-cooled stack for GenDrive systems, and it is planning to launch its Class 3 GenDrive units with an air-cooled stack. Under liquid-cooled it is planning to launch GenDrive class 1 and 2 by the end of the next year, strengthening its prospects further.
Conclusion
The company is making some good improvements, which may help it to get over its weakness soon. It has a vast range of customers, and it is seeing good traction for its GenFuel and GenDrive offerings that are expected to yield good results in the long term. So, investors can consider an investment in Plug Power as its performance can improve.
