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.

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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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe 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.

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