Bloom Energy Outpaces Industry a Month: How to Play the Stock?

Shares of Bloom Energy Corporation BE have gained 62.1% in the past month against the Zacks Alternative Energy - Other industry’s decline of 1.7%. The company has also outperformed the Zacks Oil & Energy sector’s return of 5.2% and the Zacks S&P 500 Composite’s rally of 1.2% in the same period.

Bloom Energy is gaining from increasing clean power demand, driven by AI-focused data centers, as well as a shift toward distributed energy solutions to bypass transmission and distribution constraints.

Price Performance (One Month)

Another operator in the same space, Talen Energy Corporation TLN has decline 1.9% in the same time period.

Bloom Energy is trading above its 50 and 200-day simple moving averages (SMAs), signaling a bullish trend. The 50-day and 200-day SMAs are key indicators for traders and analysts to identify support and resistance levels. It is considered particularly important, as this is the first marker of an uptrend or downtrend of the stocks.

BE 50 & 200 Day SMAs

Should you consider adding BE to your portfolio only based on positive price movements? Let us delve deeper and find out the factors that can help investors decide whether it is a good entry point to add the BE stock to their portfolio.

Tailwinds Boosting Bloom Energy’s Performance

Demand for round-the-clock power in the United States is rising, but delays and bottlenecks in large transmission projects are limiting customer options. In this environment, Bloom Energy’s Energy Server provides an alternative by operating alongside the grid through direct connection to customers’ main power feeds, while avoiding efficiency losses of centralized systems. BE’s modular design allows flexible, scalable deployment ranging from hundreds of kilowatts to several hundred megawatts to meet customer requirements.

Bloom Energy’s modules have the capacity to produce electricity without creating any pollution. The company utilizes its proprietary solid oxide technology, which generates electricity through electrochemical fuel conversion, eliminating the need for traditional combustion and does not pollute the environment like fossil fuel-based power plants.

Bloom Energy continues to invest in research and development, improving the operational excellence of its modules and also assists in reducing production costs, boosting margins of the company.

BE will also benefit from government incentives that promote clean energy production. The company is also planning to roll out a new manufacturing unit in California to meet the rising demand for its products.

Bloom Energy’s Estimates Moving Up

The Zacks Consensus Estimate for Bloom Energy’s 2026 earnings per share indicates year-over-year growth of 78.75% on 37.74% year-over-year increase in total sales.

BE Sales Estimates

Bloom Energy’s long-term (three to five years) earnings growth is pegged at 25%

BE EPS Estimates

BE Stock Returns Better Than Its Industry

The return on invested capital (“ROIC”) measures how well a company generates returns on the money it invests. ROIC is a key indicator of a company's profitability and operational efficiency. The ROIC of the company indicates that it is investing money more efficiently than its peers in the industry.

Bloom Energy’s ROIC has outperformed the industry average in the trailing 12 months. ROIC of BE was 5.22% compared with the industry’s return of 1.06%.

Another company operating in the same industry, Ormat Technologies ORA, has an ROIC of 4.45%, which is better than the industry but lower than Bloom Energy’s return.

BE is Trading at a Premium Valuation

Bloom Energy is currently trading at a premium valuation compared with its industry, with the forward 12-month price-to-sales (P/S) ratio at 13.02X. The industry is currently trading at 4.67X.

Ormat Technologies is also trading at 6.31X, a premium valuation compared with its industry.

Wrapping Up

Bloom Energy maintains steady performance, supported by increasing demand for clean energy and its ability to provide on-site power to customers. The demand for Bloom Energy’s service is going to rise as it can provide clean energy as per the customer's requirement.

Bloom Energy’s rising estimates, strong price performance and ROIC better than the industry make it attractive for investors.

Yet, considering the current premium valuation, we suggest investors maintain their position in this Zacks Rank #3 (Hold) stock.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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This article originally published on Zacks Investment Research (zacks.com).

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