Of all the novel energy companies out there — that is, companies working on not-so-mainstream ways of producing and storing power — Bloom Energy (NYSE: BE) has had hands-down one of the most dominant performances on the market since last year.
Just how dominant, you ask? How about this: Bloom Energy’s fuel cells have been deployed to over 1,200 facilities, including some of the biggest names in cloud computing, retail, and manufacturing, such as Equinix, Walmart, and Comcast.
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Or this: Bloom’s first-quarter revenue was roughly $751 million, an increase of about 130% since last year, and free cash flow rose from negative $125 million to positive $47 million.
Bloom’s ferocious run has sent the stock soaring by more than 1,460% over the past year. That means if you had invested $10,000 in Bloom stock at the beginning of May last year, your investment would have grown to a staggering $156,670 today.
Whenever one sees a huge gain like this, there’s always the temptation to buy now before it’s too late. With Bloom Energy, however, I would take a step back and consider the valuation: The clean energy stock now trades at about 139 times forward earnings and 30 times sales. Compare those metrics to the averages for the clean energy sector — 14.5 and about 3.75 — and the premium starts to feel uncomfortable.
Analysts are also on average targeting a share price of about $220, implying roughly 23% downside from today’s price near $286. That does not make Bloom a bad company. It does, however, make the stock look priced for near flawless execution.
At the same time, artificial intelligence (AI) needs electricity, and Bloom is one of the few clean energy companies that can deliver a system for on-site power generation today. Its valuation looks high, but over the long term, the business could easily catch up to it.
Should you buy stock in Bloom Energy right now?
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