Ballard Power Systems Inc (Ballard Power) develops cutting-edge renewable energy solutions. The firm creates, develops, manufactures, sells, and supports proton exchange membrane (PEM) fuel cell products for the power product, material handling, portable power, and backup power markets. Heavy duty modules, fuel cell stacks, and backup power systems are among its main offerings.
Ballard Power also provides a variety of technology solutions, such as engineering services and technology transfer. It caters to a wide range of markets, including transit buses, automobiles, rail, trucks, material handling, critical infrastructure, defense, and unmanned aerial vehicles (UAVs). R&D, testing, sales, and manufacturing facilities are located in Canada, the United States, and Denmark. Customers are served in North America, Europe, and Asia Pacific. The company’s headquarters are in Burnaby, British Columbia, Canada.
Company’s Financial Performance
Ballard Power Systems Inc. reported third-quarter and nine-month earnings for the period ended September 30, 2022. The company’s net loss for the third quarter was USD 42.88 million, up from USD 30.85 million the previous year. The basic loss per share from continuing operations was USD 0.14 in comparison to USD 0.1 the previous year. The basic loss per share was $ 0.14 in comparison to USD 0.1 the previous year. The net loss for the first nine months was USD 139.07 million, compared to USD 70.4 million the previous year. The basic loss per share from continuing operations was USD 0.47, up from USD 0.24 the previous year. The basic loss per share was $ 0.47, compared to USD 0.24 the previous year.
Company’s Market Position
The recent increase in the number of fuel cell electric cars (FCEVs) in China has been particularly noteworthy. While the United States currently has the most FCEVs on the road, China had the most new sales in 2019. China is the market leader in buses and light-duty trucks. Towards the end of 2019, the country accounted for 97% of all fuel cell buses and 98% of all fuel cell trucks in service worldwide. China’s government has put legislation in place to boost fuel cell technology, with a goal of 1 million FCEVs and 1,000 hydrogen recharging stations by 2030. Ballard Power controls 45% of China’s FCEV market, putting them in a good position to gain from this expansion.
Ballard Power is also a global leader in the fuel cell bus market. It controls more than 80% of the European market and 95% of the California market.
While Ballard Power’s sales growth appears to be outstanding, it has recently lagged behind its peers.
Should you buy, hold or sell
Ballard’s outstanding shares have approximately doubled in five years due to continual stock issuances. The company’s price-to-sales ratio has risen to roughly 82 based on its existing outstanding shares.
Let’s simply say the number of shares outstanding doubles in the next ten years, which is a pretty cautious prediction if the company’s income rises at the rate it hopes, and considering that the number of shares outstanding has already doubled in the last five years. Even still, the company’s price-to-sales ratio at $5.2 billion in revenue is 3.7, which is significantly higher than the broader market today. And we’re talking about revenue that the company could produce in ten years.
This calculation demonstrates the amount to which the Ballard Power System stock has been overvalued. Today, the stock has a market worth of over $10 billion, with annual revenues of around $100 million and no earnings. It doesn’t make sense to me unless the company has unique technology or know-how. However this does not appear to be the case.
If producing hydrogen fuel cells becomes lucrative eventually, larger and more financially powerful competitors would most likely enter the market, putting pressure on margins and commoditizing the product. As a result, we suggest you to avoid Ballard Power System stock until the company displays profits or the stock trades at a level more in accordance with the company’s current financial status.
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