FuelCell Energy FCEL is trading below its 50-day and 200-day simple moving average (SMA), signaling a bearish trend. FCEL shares have declined 44.8% in the past six months against its industry’s rally of 41.1%.

The company reported a negative earnings surprise in the fourth quarter of fiscal 2024. Yet, in 2025, the company’s operations are expected to be better due to its global restructuring, which will focus on FCEL’s core technologies for distributed power generation, grid resiliency and data center growth.

FCEL’s SMA 50 and 200-Day

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The 50-day and 200-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as this is the first marker of a stock’s uptrend or downtrend.

FCEL’s Price Performance (Six months)

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Should you consider adding FCEL to your portfolio based on negative price movements? Let’s delve deeper and find out factors that can help investors decide whether it is a good entry point to add FCEL stock to their portfolio at a low price level.

Factors Acting as FCEL Stock’s Tailwind

FuelCell Energy is working on a global restructuring of its operations in the United States, Canada and Germany. This initiative will lower operating costs, realign resources toward advancing the company’s core technologies, and protect its competitive position amid slower-than-expected investments in clean energy.

FCEL continues to receive orders from its customers who need a 24X7 clean energy supply to efficiently run their operations. Earlier this month, the company received a contract to build a 7.4 MW fuel cell power plant in Hartford, CT. The project is expected to add more than $160 million of future revenues to FuelCell Energy’s generation backlog. The backlog at the end of fiscal 2024 was $1.16 billion, reflecting year-over-year growth of 12.6%.

The company continues to invest in research and development (“R&D”) activities and develop new products to provide clean energy. Courtesy of its R&D initiatives, the company now has 167 U.S. patents covering its fuel cell technology and 375 patents in other jurisdictions covering fuel cell technology. Ongoing innovation will allow the company to diversify its revenue streams by delivering products and services that support the global energy transition.

FCEL’s Estimates Moving Up

The Zacks Consensus Estimate for FCEL’s fiscal 2025 earnings per share indicates year-over-year growth of 29.44%. The Zacks Consensus Estimate for FCEL’s fiscal 2025 revenues indicates year-over-year growth of 61.16%.

Another alternate energy provider, Clearway Energy’s CWEN Zacks Consensus Estimate for 2025 revenues indicates year-over-year growth of 9.46%.

FCEL's Earnings Estimates

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FCEL Stock Returns Lower Than its Industry

FuelCell Energy’s trailing 12-month return on equity (ROE) is -18.58%, much lower than the industry average of 8.27%. ROE is a financial ratio that measures how well a company uses its shareholders’ equity to generate profits.

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FCEL Utilizes Lesser Debt Than Industry Peers

FuelCell Energy is utilizing lower debts compared with its industry peers to operate its business. The company’s current debt to capital is 16.79%, much lower than the industry average of 61.17%.

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Wrapping Up

FuelCell Energy will benefit from the increasing acceptance of the fuelcell technology in the long-term and increasing concern about rising emissions. The increasing backlog indicates an increase in demand.

The company returned lower than the industry and is expected to incur losses in the upcoming quarters. Thus, it is better to adopt a cautious stance for the Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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