Plug Power (PLUG, Financial) experienced a notable decline of 7.3% in its share price following the announcement of a $1.7 billion loan guarantee from the U.S. Department of Energy. This loan aims to boost the company's ability to expand its domestic manufacturing and hydrogen production capabilities.
The recent loan approval is a move to fund up to six projects that produce and liquefy zero- or low-carbon hydrogen across the United States, starting with a green hydrogen plant in Graham, Texas. Currently, Plug Power operates similar facilities in Woodbine, Georgia; Charleston, Tennessee; and St. Gabriel, Louisiana, with a total daily hydrogen fuel output of 45 tons.
The newly approved funds are expected to triple PLUG's production to approximately 135 tons per day. However, this expansion comes at a cost, adding to Plug Power's existing debt of nearly $930 million, against cash reserves of less than $94 million. The company faces significant financial challenges, including an annual cash burn of over $1.3 billion and annual losses amounting to $1.4 billion.
From a financial analysis perspective, PLUG's stock is currently trading at $2.54, with a market cap of $2.3 billion. The company displays a distressed financial picture, highlighted by an Altman Z-score of -1.28, which suggests a considerable risk of bankruptcy within the next two years. The Piotroski F-Score of 2 indicates poor business operations.
Despite these challenging financial metrics, Plug Power benefits from a low Price-to-Book (P/B) ratio of 0.74, suggesting the stock may be undervalued based on its assets. The GF Value evaluation suggests PLUG is a possible value trap, with a GF Value of $5.78. For further details, refer to the GF Value page.
PLUG's performance is marked by a volatile history, with a 10-year price change of -0.5% and a 3-year price change of -52.2%. The stock has recently shown some upward movement with a year-to-date increase of 19.25%. However, the financial health of the company remains a concern, making it imperative for investors to weigh the risks carefully.
