Ballard Power Systems Stock Is Charging Up Again

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Ballard Power Systems Sent to the Dumpster but Former Star Is Battling Back

When you think of electric or battery-powered vehicles, I’m confident that the company that immediately comes to mind is not Ballard Power Systems Inc (NASDAQ:BLDP).

Instead, Tesla Inc (NASDAQ:TSLA) would likely dominate your thoughts. But back in the pre-Tesla days, in the late 1990s and early 2000s, Ballard was the toast of Wall Street.

BLDP was a forerunner in the research and development of specialized hydrogen-powered fuel cells that were expected to revolutionize the vehicle and industrial markets.

The problem was that the company failed to produce an efficient fuel cell that was small enough to power vehicles.

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Meanwhile, BLDP stock traded at just under $150.00 in early 2000 on the euphoric buying that characterized the dotcom era, when valuations and the concept of revenue were pushed aside.

Of course, we all know what followed in early 2000 was the destruction the technology sector.

Today, Ballard Power Systems provides power solutions to markets including transit bus, rail, auto, materials handling, UAV and defense, and critical infrastructure.

The company has inked small deals in China, and the hope is that bigger deals will also come, due to the strong push toward green energy in that country.

On the chart, BLDP stock is showing some encouraging technical signs after breaking higher on two successive upside trade gaps at around $2.94 and $3.55.

Chart courtesy of StockCharts.com

BLDP stock is up by more than 30% over the past three months, with a 20.4% gain over the past month.

The next technical targets for BLDP stock are $4.40 and $5.00.

My Bull Case for BLDP Stock

On the revenue front, Ballard Power Systems has recorded growth in two straight years, including a 42.2% increase to $121.3 million in 2017.

Fiscal Year Revenue (Millions) Growth
2014 $68.7 8.9%
2015 $56.5 -17.8%
2016 $85.3 51.0%
2017 $121.3 42.2%

One plus was the surfacing of positive earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2017, following three straight years of higher growth.

Fiscal Year EBITDA (Millions) Growth
2014 -$24.7 -83.6%
2015 -$24.3 1.7%
2016 -$10.6 56.6%
2017 $1.3 112.1%

The company has yet to turn a profit, but the adjusted loss narrowed to $0.05 per diluted share in 2017 and we could see break-even adjusted earnings in 2019.

Fiscal Year GAAP Diluted Earnings Per Share
2014 -$0.24
2015 -$0.05
2016 -$0.17
2017 -$0.05

For 2018, Ballard is estimated to report an adjusted loss of $0.07 per diluted share and follow this with a break-even 2019, although the high estimate calls for BLDP to make $0.05 per diluted share. (Source: “Ballard Power Systems Inc. (BLDP),” Yahoo! Finance, last accessed September 7, 2018.)

The company has no debt and is working toward producing positive free cash flow.

Fiscal Year Free Cash Flow (Millions)
2014 -$23.8
2015 -$35.4
2016 -$8.9
2017 -$16.7

Analyst Take

Trading below $4.00 and staging a breakout, BLDP stock looks intriguing as the company grows its revenue and moves toward profitability.

Ballard Power Systems was a star in the past, and the company is showing signs of becoming more relevant again. This could reward investors.