Bloom Energy Outpaces Industry in YTD: How to Play the Stock?

Shares of Bloom Energy Corporation BE have gained 103.9% in the year-to-date (“YTD”) period compared with the Zacks Alternative Energy - Other industry’s rally of 19.5%. The company has also outperformed the Zacks Oil & Energy sector’s return of 20.1% and the Zacks S&P 500 composite’s rally of 0.3% in the same period.

Bloom Energy is benefiting from rising demand for clean power especially from AI-driven data centers, along with a growing move toward distributed energy systems that help avoid transmission and distribution bottlenecks.

Price Performance (Year to Date)

Another company operating in the same industry and utilizing fuel cell technology to produce clean electricity for customers is FuelCell Energy FCEL. Shares of FCEL have gained 17.6% in the year-to-date period. FuelCell Energy is pushing forward green hydrogen production by deploying high-temperature solid oxide electrolyzer technology that uses steam to improve efficiency and reduce the amount of electricity required to generate hydrogen.

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 BE stock to their portfolio.

Key Drivers Powering Bloom Energy’s Momentum

Bloom Energy uses its proprietary solid oxide technology to produce electricity via electrochemical fuel conversion rather than combustion, delivering power without the pollution associated with traditional fossil fuel power plants. The clean electricity produced by the company is utilized to meet the rising demand.

As demand for clean power continues to grow across the United States, delays and congestion in major transmission projects are narrowing customers’ choices. In this context, Bloom Energy’s Energy Server offers a compelling alternative by operating in parallel with the grid through direct connections to customers’ primary power supplies, while avoiding the efficiency losses typical of centralized generation. Its modular architecture enables flexible, scalable deployments from a few hundred kilowatts to several hundred megawatts tailored to evolving customer needs.

Bloom Energy is strengthening its business through continued investment in R&D, which is enhancing module performance, driving manufacturing efficiencies and supporting margin expansion. At the same time, the company stands to benefit from government incentives that encourage clean energy deployment and is planning to launch a new manufacturing facility in California to help meet growing demand.

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 peers in the industry.

Bloom Energy’s ROIC has outperformed the industry average in the trailing 12 months. ROIC of BE was 4.12% compared with the industry’s return of 1.64%.

Bloom Energy’s Earnings Estimates Moving Up

The Zacks Consensus Estimate for Bloom Energy’s 2026 and 2027 earnings per share indicates year-over-year growth of 81.58% and 108.46%, respectively. Bloom Energy’s long-term (three to five years) earnings growth is pegged at 25%.

Bloom Energy’s Earnings Surprise

Bloom Energy’s earnings have surpassed estimates in three of the past four quarters and met once, resulting in an average surprise of 103.45%.

Earnings of another company, Talen Energy Corporation TLN, operating in the same industry, have surpassed estimates in two out of the past four quarters and missed in the other two, resulting in an average surprise of 56.19%.

BE Is Trading at a Premium Valuation

Bloom Energy is currently trading at a premium valuation compared with the industry, with its forward 12-month price-to-sales (P/S) ratio of 13.84X. The industry is currently trading at 5.83X.

Summing Up

Bloom Energy’s performance remains resilient, underpinned by growing clean energy demand and its capacity to deliver fast, reliable power solutions. Demand for its services is expected to rise as the company supplies tailored clean energy directly to customers, lowering dependence on conventional transmission and distribution networks.

Bloom Energy stands out as an appealing investment opportunity, supported by upward-trending earnings estimates, solid share price performance and a return on invested capital that outperforms industry peers.

However, 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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