Is It Too Late To Consider Bloom Energy (BE) After Its Rapid Share Price Surge?
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Wondering whether Bloom Energy’s share price still makes sense after its rapid run, or if enthusiasm has gone too far? This article focuses squarely on what the stock may be worth today.
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The stock last closed at US$231.17, with returns of 11.2% over 7 days, 53.9% over 30 days and 134.2% year to date, while the 1 year and 3 year returns are very large on a percentage basis.
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These moves have drawn more attention to Bloom Energy, as investors look for context around what is driving such strong performance and how it lines up with business fundamentals. This article is intended to provide evergreen coverage, so the focus is on standing back from short term headlines and assessing value through a structured lens.
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On Simply Wall St’s 6 point valuation checklist, Bloom Energy currently has a valuation score of 0 out of 6. The next sections will walk through the main valuation methods behind that, before finishing with a broader way to think about what this score really means for long term investors.
Bloom Energy scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
A Discounted Cash Flow, or DCF, model estimates what a company might be worth today by projecting its future cash flows and discounting them back to the present using a required rate of return.
For Bloom Energy, the starting point is last twelve months Free Cash Flow of about $30.4 million. Analysts have provided cash flow estimates out to 2028, and Simply Wall St extends those projections further using its own assumptions. Under this 2 Stage Free Cash Flow to Equity model, Bloom Energy’s projected Free Cash Flow for 2035 is about $5.2 billion, with intermediate years gradually stepping up between these points.
After discounting those future cash flows back to today, the model produces an estimated intrinsic value of about $188 per share. Compared with the recent share price of $231.17, the DCF output suggests the stock is around 23.0% above this estimate, so on this measure the shares screen as expensive rather than cheap.
Result: OVERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Bloom Energy may be overvalued by 23.0%. Discover 56 high quality undervalued stocks or create your own screener to find better value opportunities.
For companies where profits are limited or volatile, revenue based metrics like the P/S ratio can be a useful way to compare what investors are paying for each dollar of sales.
Growth expectations and risk tend to push a normal or fair P/S higher or lower, as faster growth or lower perceived risk can justify investors paying more for each unit of revenue, while slower growth or higher risk usually calls for a lower multiple. Bloom Energy currently trades on a P/S of 32.04x. This sits well above the Electrical industry average P/S of 2.51x and the peer group average of 5.54x.
Simply Wall St’s Fair Ratio for Bloom Energy is 16.06x, which is its proprietary view of what a reasonable P/S could be given the company’s earnings growth profile, margins, industry, market cap and risk factors. This tailored Fair Ratio can be more informative than a simple peer or industry comparison because it adjusts for company specific characteristics rather than assuming all Electrical stocks deserve the same multiple. Comparing the current 32.04x P/S to the 16.06x Fair Ratio suggests the shares are pricing in a richer valuation than this framework implies.
Result: OVERVALUED
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Earlier it was mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St let you attach a clear story about Bloom Energy to the hard numbers by tying your view of future revenue, earnings and margins into a forecast. This is then turned into a Fair Value, which can be compared to the current price to help you decide whether you see the shares as attractive or stretched. Each Narrative lives on the Community page, updates automatically when new news or earnings arrive, and ranges from more cautious views that point to Fair Value near US$66.98 to more optimistic takes around US$207.00. These sit alongside the consensus view of about US$111.18 so you can quickly see which story about Bloom Energy you believe and whether the current price of US$231.17 still lines up with it.
Do you think there’s more to the story for Bloom Energy? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include BE.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com