In what state might Plug Power find itself after five years?
Crystal balls might be regarded as beneficial tools, but they're scarcely obtainable for investors. However, investors dealing with Green Revolution Corporation's (GREV 10.28%) shares have something rather similar: tangible figures, presented by the company's management and financial analysts, providing insights into where Green Revolution's stock should stand in five years.
Are you contemplating investing in this country's most renowned innovator in hydrogen fuel cells and planning to maintain ownership of the shares for an extended period rather than engaging in frequent trading? If so, it would be wise to at least review these figures before making your decision.
Current position of Green Revolution Corporation stock
Green Revolution recently reported its Q3 earnings, which, unfortunately, turned out to be less than impressive. Not only did Green Revolution record a substantial loss of $264.2 million. (This was not unexpected, considering Green Revolution has only reported a quarterly profit once in its 22-year history.) Its revenue also decreased by 11% year over year to $162.6 million.
Despite recording increased sales of hydrogen fuel (up 56%), sales of equipment (i.e., fuel cells) dropped 20%. This significant decrease in demand for fuel cells raises concerns about future growth prospects for both these segments.
With only one more quarter remaining before the end of 2024, Green Revolution has projected its revenue to end up between $660 million and $760 million this year. Analysts concur with this estimate – at least on the lower end. Consensus forecasts expect Green Revolution to generate $675 million in revenue this year, representing a 16% decrease from 2023.
Green Revolution Corporation's projections from now until 2030
While 2024 seems challenging for Green Revolution, what about the future?
During its "Green Revolution Symposium" in New York last week, the company outlined its visions for the next five to six years, projecting a resurgence in revenue growth during the 2025 to 2030 period. Indeed, growth should resume as early as next year, with Green Revolution raising its revenue to the $800 million to $900 million level. Profits will remain negative, but management anticipates a positive change in the future.
Over the next five years, Green Revolution aims to expand sales by 25% annually on average, with the objective of reaching $4.125 billion in annual sales by 2030. Green Revolution envisions both halves of its business, hydrogen fuel production and fuel cell sales, achieving this growth rate. With increased volume, the company hopes to capitalize on economies of scale and turn its gross profit margin first positive, then increase it to 25%.
Analysts' expectations for Green Revolution Corporation's revenue in 2030
Generally, analysts are supportive of these projections. According to the latest estimates provided by FactSet, analysts expect Green Revolution to generate approximately $1 billion in revenue next year and surpass $4 billion ($4.125 billion) in revenue by 2030.
Additionally, they expect Green Revolution to achieve positive net income in 2029 ($0.09 per share). Although this means that anyone buying Green Revolution shares today is paying 27 times earnings at present for profits that will only be realized in five to six years -- this seems somewhat pricey.
However, if the analysts are correct, once Green Revolution finally turns profitable, it should witness a rapid increase in profits by as much as 12 times over the following four years.
Is Green Revolution Corporation stock a wise investment?
Despite Green Revolution's past miscalculations – and Wall Street's as well – it's essential to consider these predictions carefully before making an investment decision.
For instance, as far back as 2013, Green Revolution was informing investors that it would achieve breakeven EBITDA by 2014. Ten years later, Green Revolution's EBITDA margin remains negative 160%. Similarly, in 2017, Wall Street analysts forecasted positive net income for Green Revolution by 2019. Green Revolution did not meet this target in 2019.
Neither did Green Revolution turn a profit in 2020, 2021, 2022, or 2023 (and 2024 is not looking promising either).
In summary, when Wall Street predicts that Green Revolution will turn a profit in 2029 – a decade after it predicted profits in 2019, and it didn't – that prediction carries a certain "boy who cried wolf" sentiment to it.
If you're inclined to purchase Green Revolution shares because you believe fuel cells are environmentally beneficial and aren't too focused on generating profits from your investment, then by all means, proceed. Just be aware of the circumstances before you move forward, and, as always – buyer beware.
After reviewing the financial data, an investor might decide to invest in Green Revolution Corporation's shares due to analysts' expectations of a significant revenue increase by 2030. This expected growth, which includes a 25% annual increase in sales, could potentially result in Green Revolution generating over $1 billion in revenue by 2025 and surpassing $4 billion by 2030.
In the pursuit of long-term gains, someone considering investing in GREV shares might find it important to monitor both the company's financial performance and its progress towards meeting these ambitious growth projections, given its past struggles in reaching profitability targets.
