Bloom Energy has been on fire lately. In the past six months alone, the company’s stock price has rocketed 571%, reaching $109.97 per share. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Following the strength, is BE a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free for active Edge members.
Why Is Bloom Energy a Good Business?
Working in stealth mode for eight years, Bloom Energy (NYSE: BE) designs, manufactures, and markets solid oxide fuel cell systems for on-site power generation.
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Thankfully, Bloom Energy’s 15.8% annualized revenue growth over the last five years was incredible. Its growth beat the average industrials company and shows its offerings resonate with customers.
2. Increasing Free Cash Flow Margin Juices Financials
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, Bloom Energy’s margin expanded by 19.5 percentage points over the last five years. Bloom Energy’s free cash flow margin for the trailing 12 months was 2.7%.
3. New Investments Bear Fruit as ROIC Jumps
A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).
We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Bloom Energy’s ROIC has increased. This is a good sign, but we recognize its lack of profitable growth during the COVID era was the primary reason for the change.
Final Judgment
These are just a few reasons why Bloom Energy ranks highly on our list, and with the recent surge, the stock trades at 186.1× forward P/E (or $109.97 per share). Is now a good time to buy despite the apparent froth? See for yourself in our comprehensive research report, it’s free for active Edge members .
Stocks We Like Even More Than Bloom Energy
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