Off to a powerful start in 2025, shares of fuel cell developer Bloom Energy (NYSE: BE) soared nearly 20% through Jan. 25 on investors' growing enthusiasm that hydrogen will help meet the steep power demands that artificial intelligence (AI) is placing on data centers. Investors gained insight into China's AI model DeepSeek on Jan. 27, however, and shares of various AI-related stocks, including Bloom Energy, plunged.
But prospective investors would be shortsighted to focus solely on the stock price. Instead, they should turn their attention to the company's income statement, choosing to monitor its operating income for a good source of insight into the company's worthiness as an investment.
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Bloom Energy continues toward profitability
Distinguishing itself from hydrogen peers, such as Plug Power, Bloom Energy has consistently generated a gross profit over the past five years. In fact, the company even expanded its gross profit margin on a generally accepted accounting principles (GAAP) basis in 2023 to 14.8% -- a 240-basis-point increase over that 12.4% gross profit margin it reported in 2022.
BE Gross Profit (Annual) data by YCharts.
Another major step Bloom Energy could take is to achieve profitability on an operating income basis. In the third quarter of 2024, Bloom Energy reported a GAAP operating income margin of -2.9%, an improvement over both the operating margins of -6.9% for the second quarter of 2024 and -25.9% for the third quarter of 2023.
Furthermore, investors can monitor if Bloom Energy achieves management's forecast. Albeit, it's on a non-GAAP basis, but management projects 2024 adjusted operating income of $75 million to $100 million. Should it achieve the midpoint of this range, it will represent a notable increase over the 2023 non-GAAP operating income of $19.2 million -- and a possible harbinger of operating income on a GAAP basis to be reported in the near future.
What's a hydrogen investor to do?
Bloom Energy has made excellent progress over the past year, improving its financial health. Prospective investors will certainly want to tune in for the company's fourth-quarter 2024 financial results to see if the progress continues.
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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
