Is Ballard Stock a Buy After Earnings?

Ballard (TSX:BLDP) stock saw shares rise slightly on shrinking losses, but there is still a lot of work to be done for this stock.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published May 7, 2024 9:00 pm EDT

Shares of Ballard Power Systems (TSX: BLDP) have been turning around over the last month. And this continued as the company reported first-quarter earnings that saw revenue rise 9% compared to last year.

However, the company continued to see their losses grow, which led to subdued growth in share price on May 7. So, is there enough reason to buy Ballard stock on the TSX today?

What happened?

Shares of the Vancouver-based fuel cell maker climbed slightly by 4% after the company reported its first-quarter earnings. The growth didn’t last too long, with shares falling back towards its opening price point for the day.

The company reported that it saw a loss from continuing operations come up to US$41.1 million, or about US$0.14 per share, for the first quarter. This was an increase from the loss of US$32.4 million, or US$0.11 per share, during the same time last year.

Revenue, however, increased to US$14.5 million, a 9% increase from the US$13.2 million reported during the first quarter of 2023. What’s more, its heavy-duty mobility revenue rose significantly to US$10.6 million from US$8.6 million in 2023.

How it stacks up

The big question is how the first quarter stacks up not on a year-over-year basis but instead on a quarter-over-quarter basis. This can help us see whether Ballard stock is achieving some momentum. And that would certainly explain why the company has seen its share rise slightly over the last few months.

During the third quarter, the company reported revenue of US$27.6 million, demonstrating a drop when compared to the first quarter of this year. Furthermore, losses were at US$36.2 million, again showing that the company increased their losses as well.

By the fourth quarter, shares during this time dropped by 10%. This came from reporting a US$48.9 million net loss, with a shrinking backlog. Meanwhile, total revenue hit US$46.8 million, which was certainly a strong increase. However, what we can see is that while losses shrunk during the first quarter, revenue is seriously down on a quarterly basis.

What now?

Ballard stock has been increasing slightly in the last month. But earnings have been far too unpredictable for investors these days. The company needs to improve its losses and deliver solid revenue results before investors will likely be interested once more.

For now, the company hasn’t provided any guidance for 2024. While revenue in 2024 will be back-half weighted, the stock believes 30% in the first half and 70% by the second half — similar to 2023 results. Therefore, investors will likely want to wait for that second half before investing once more.

So, while shares have increased by 16% in the last few weeks, shares of Ballard stock are still down 34% in the last year. And a lot more growth is going to need to come their way before investors are likely to see a surge once again.