Carbonate fuel cell technology developer FuelCell Energy (NASDAQ: FCEL) reported Q1 CY2025 results topping the market’s revenue expectations, with sales up 66.8% year on year to $37.41 million. Its GAAP loss of $1.79 per share was 25.5% below analysts’ consensus estimates.

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“In our second fiscal quarter, we delivered sequential revenue growth and continued executing on the disciplined cost management strategy we initiated in late 2024, in recognition of the changing energy landscape,” said Jason Few, President and Chief Executive Officer.

Company Overview

Founded in 1969, FuelCell Energy (NASDAQ: FCEL) is a leading manufacturer and developer of carbonate fuel cell technology for stationary power generation.

Sales Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, FuelCell Energy grew its sales at an excellent 13.4% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. FuelCell Energy’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 9.4% over the last two years. FuelCell Energy isn’t alone in its struggles as the Renewable Energy industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.

We can better understand the company’s revenue dynamics by analyzing its backlog, or the value of its outstanding orders that have not yet been executed or delivered. FuelCell Energy’s backlog reached $1.26 billion in the latest quarter and averaged 6.2% year-on-year growth over the last two years. Because this number is better than its revenue growth, we can see the company accumulated more orders than it could fulfill and deferred revenue to the future. This could imply elevated demand for FuelCell Energy’s products and services but raises concerns about capacity constraints.

This quarter, FuelCell Energy reported magnificent year-on-year revenue growth of 66.8%, and its $37.41 million of revenue beat Wall Street’s estimates by 14.4%.

Looking ahead, sell-side analysts expect revenue to grow 38.3% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and suggests its newer products and services will fuel better top-line performance.

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Operating Margin

FuelCell Energy’s high expenses have contributed to an average operating margin of negative 114% over the last five years. Unprofitable industrials companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

Analyzing the trend in its profitability, FuelCell Energy’s operating margin decreased by 18.3 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. FuelCell Energy’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q1, FuelCell Energy generated a negative 95.7% operating margin. The company's consistent lack of profits raise a flag.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Although FuelCell Energy’s full-year earnings are still negative, it reduced its losses and improved its EPS by 18.7% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For FuelCell Energy, its two-year annual EPS growth of 12% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q1, FuelCell Energy reported EPS at negative $1.79, up from negative $2.18 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street expects FuelCell Energy to improve its earnings losses. Analysts forecast its full-year EPS of negative $7.41 will advance to negative $4.94.

Key Takeaways from FuelCell Energy’s Q1 Results

We were impressed by how significantly FuelCell Energy blew past analysts’ revenue expectations this quarter. On the other hand, its EPS and EBITDA fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded up 5.2% to $5.47 immediately after reporting.

So do we think FuelCell Energy is an attractive buy at the current price? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.