Stocks’ Details

Blue Apron Holdings, Inc.

Quarterly Performance (For the Period Ended September 30, 2020): Blue Apron Holdings, Inc. (NYSE: APRN) provides meal-kit delivery services. As on 4 November 2020, the market capitalization of the company stood at ~$92.85 million. During the quarter ended 30 September 2020, the company reported an increase of 13% in net revenue to $112.25 million. This was mainly due to continued positive consumer behavior and execution of the company’s growth strategy. In the same time span, average revenue per customer increased by 22% to $314 and witnessed an improvement of 42% in a net loss to $15.26 million. The company also reported a healthy balance sheet with a cash balance of $58.7 million. 

Key Customer Metrics (Source: Company Reports)

Guidance: The company has provided guidance for the fourth quarter and expects a YoY growth of 15% to 19% in net revenue to ~$108 to $112 million. The company expects an adjusted EBITDA loss of $5.0 million and a net loss of no more than $15.0 million.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation (Illustrative)

EV/EBITDA Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: APRN has experienced increased demand for its meal kits and expects the high demand to be sustained through the end of this year. As per NYSE, the stock of APRN is trading close to its 52-weeks’ low levels of $2.01, proffering a decent opportunity for the investors to enter the market. The stock of APRN gave a negative return of 53.86% in the past three months and a negative return of 23.69% in the last one month. On a technical front, the stock of APRN has a support level of ~$3.76 and a resistance level of ~$10.98. We have valued the stock using the EV/EBITDA multiple based illustrative relative valuation method and arrived at a target upside of lower double-digit (in % terms). Considering the current trading levels, decent guidance for net revenue, and improved demand for meal kits, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $5.25, up by 13.88% on 4 November 2020.

Bloom Energy Corporation

Quarterly Performance (For the Period Ended 30 September 2020): Bloom Energy Corporation (NYSE: BE) manufactures and markets oxide fuel cells that produce on-site electricity. As on 4 November 2020, the market capitalization of the company stood at ~$2.28 billion. The company has recently released preliminary results for the third quarter and reported an increase of 6.6% (QoQ) in revenue to $200.3 million and a gross margin of 28.0% on a GAAP basis. In the same time span, adjusted EBITDA of the company stood $27.7 million with a net loss of $12.0 million. Despite the COVID-19 pandemic, the company reported decent core business growth and announced several new customers throughout the quarter.

Quarterly Financial Highlights (Source: Company Reports)

Secure Financing of $230 Million: During the quarter, the company secured financing of $230 million through 2.5% Green Convertible Notes due 2025. The company also improved its balance sheet by completing the conversion of the outstanding $249 million 10% Convertible Promissory Notes due 2021 and calling the outstanding $79 million of 10% Senior Secured Notes due 2024.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation (Illustrative)

EV/EBITDA Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: The company seems well positioned for a variety of applications and is improving its balance sheet to pursue industrial scale opportunities. The stock of BE gave a negative return of 1.49% in the past three months and a negative return of 22.03% in the last one month. On a technical front, the stock of BE has a support level of ~$10.56 and a resistance level of ~$16.89. We have valued the stock using the EV/EBITDA multiple based illustrative relative valuation and have arrived at a target upside of lower double-digit (in % terms). For the said purposes, we have considered Nextera Energy Partners LP (NYSE: NEP), Sunnova Energy International Inc (NYSE: NOVA), and Pinnacle West Capital Corp (NYSE: PNW) as peers. Considering the healthy balance sheet, decent financial performance, we recommend a ‘Speculative Buy’ rating on the stock at the closing price of $13.8, down by 4.96% on 4 November 2020.

FuelCell Energy, Inc.

U.S. Department of Energy Project Award: FuelCell Energy, Inc. (NASDAQ: FCEL) is one of the leading companies in fuel cell technology with a purpose of utilizing fuel cell platforms to provide clean energy. As on 4 November 2020, the market capitalization of the company stood at ~$657.18 million. The company has been selected for a funding of $8.0 million award to support the design and manufacture of a SureSource electrolysis platform capable of producing of hydrogen by the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy.

Quarterly Performance (For the Period Ended 31 July 2020): The company has released its results for its third quarter ended 31 July 2020, wherein it reported a decline in revenues to $18.7 million as compared to $22.7 million in 3QFY19 and witnessed an increase in loss from operations to $10.8 million as compared to $1.1 million in the pcp. As of 31 July 2020, the company reported a cash balance of $66.3 million, reflecting an increase from $9.4 million as of October 31, 2019.

Financial Performance (Source: Company Reports)

Stock Recommendation: The company is expecting improved margins through enhanced platform performance and is focused on strengthening its balance sheet. As per NASDAQ, the stock of FCEL is inclined towards its 52-weeks’ high level of $3.5 and retains limited potential for further growth. The stock of FCEL gave a negative return of 12.89% in the past three months but a positive return of 17.98% in the last one month. On a technical front, the stock of FCEL has a support level of ~$1.78 and a resistance level of ~$2.87. On a TTM basis, the stock of FCEL is trading at an EV/Sales multiple of 11.8x, higher than the industry median (Energy) of 2x, and thus seems overvalued. Considering the current trading levels, volatility in returns, higher EV/Sales multiple and softer market conditions, we suggest investors to keep an eye on the business activities and give an ‘Avoid’ rating on the stock at the closing price of $2.23, down by 3.88% on 4 November 2020.

Daily Comparative Chart (Source: Refinitiv, Thomson Reuters)

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