If one had to identify a theme for the recent fourth-quarter 2024 earnings presentation from fuel cell and hydrogen specialist Plug Power (PLUG -0.41%), "hope springs eternal" would be a strong choice. With revenue declining in 2024 and profitability still distant, management announced a restructuring plan that will ostensibly improve the company's finances.
But in the interest of keeping things simple, those with Plug on their radars needn't worry about all the numbers that are bandied about with the restructuring plan. Instead, they need to focus on merely one figure in the coming quarters.
NASDAQ: PLUG
Key Data Points
The journey toward a positive bottom line begins with this important first step
While Plug has achieved success at growing revenue over the past 15 years, comparable growth at the bottom of the income statement has been elusive.
PLUG Revenue (Annual) data by YCharts.
Management, however, doesn't believe that this worrying trend will continue. During a recent investor presentation, Plug projected that it will generate both positive operating income and net income by the end of 2027 and 2028, respectively.
Before investors give any credence to management's outlook, the company needs to achieve a gross profit. Evidently, management thinks that investors needn't wait long before this occurs, projecting that Plug will post a gross profit at the end of 2025.
Is it a good time to power your portfolio with Plug Power?
Those unfamiliar with Plug Power should remain skeptical of the profitability forecasts given its long history of failing to achieve earnings forecasts. Until the company shows that it can consistently generate at least a gross profit -- something that has remained unattainable over the past five years -- the operating income and net income projections should mean little.
Moreover, it's important to recognize that Plug has been moving further away from reporting a gross profit over the past three years. After posting a gross profit margin of negative 27.7% in 2022, Plug reported gross profit margins of negative 57% and negative 99.4% in 2023 and 2024, respectively. At this point, therefore, only those with ample risk tolerances should consider a position in Plug Power.
