Can FCEL Sustain Its Momentum? Why This Fuel Cell Stock Is Worth Your Attention

FuelCell Energy (FCEL) has been turning heads recently, with its stock climbing 47.5% over the past three months—substantially ahead of the Alternative Energy – Other industry’s 3.5% rise and the broader S&P 500. The question now: is this rally sustainable, or just a temporary spike?

The Core Driver: Data Center Demand and South Korea Exposure

At the heart of FCEL’s strength lies a structural tailwind that goes beyond typical market cycles. The company’s strategic positioning in the South Korean fuel cell market, combined with soaring electricity demand from data centers, has created a compelling growth thesis.

The numbers tell the story. FuelCell Energy maintains a project backlog of 108 megawatts across four initiatives in South Korea alone. More notably, it recently signed a memorandum of understanding with Inuverse to deploy 100 MW of fuel cell capacity at the AI Daegu Data Center—rolling out in phases. This isn’t speculative; it’s concrete, booked business.

Beyond new installations, recurring revenue streams are amplifying the company’s appeal. Service agreements for maintaining fuel cell operations generated $3.1 million in the last quarter, doubling from $1.4 million a year prior. These contracts span one to 20 years, providing predictable cash flows that investors value highly.

Operational Restructuring Strengthens the Competitive Position

FuelCell Energy isn’t sitting idle. The company is executing a comprehensive restructuring across its U.S., Canadian, and German operations—cutting costs and concentrating resources on core fuel cell technologies. This disciplined approach is improving operational efficiency precisely when clean energy investments are intensifying.

The company’s backlog as of mid-2025 reached $1.24 billion, reflecting a 4% year-over-year increase. Most of this comes from its Generation segment, underscoring stable, growing demand for its combustion-free power solutions.

Technical Setup: Trading Above Key Resistance

From a technical perspective, FCEL is trading well above its 200-day simple moving average, a classic indicator of upward momentum. For traders and analysts alike, this level represents a critical threshold—breaching and holding above it suggests the uptrend has legs.

For comparison, peer Bloom Energy (BE) has climbed 82.3% in the same three-month window, signaling broad strength across the fuel cell and distributed power generation sector.

Growth Trajectory: Estimates Point Higher

Wall Street expects FCEL’s fiscal 2026 revenue and earnings per share to expand 21.47% and 56.26% respectively year-over-year—impressive numbers that reflect confidence in the company’s execution. To put this in perspective, competitor Ameresco (AMRC) is projected for 8.43% revenue growth and 44.58% earnings growth, making FCEL’s acceleration notable.

Financial Health: Fortress Balance Sheet

A key differentiator for FCEL is its conservative use of leverage. The company’s debt-to-capital ratio sits at 19.4%, well below the industry average of 59.4%. This financial discipline provides cushion during market downturns and flexibility for future investments.

However, there’s a caveat. FCEL’s trailing 12-month return on equity stands at negative 20.53%, lagging the industry average of 7.89%. This suggests profitability challenges that investors should monitor closely—strong revenue growth and backlog don’t automatically translate to bottom-line returns.

The Investment Thesis

FuelCell Energy checks many boxes: growing backlog, South Korean market exposure, surging data center electricity demand, recurring service revenue, operational improvements, and a fortress balance sheet relative to peers. Over the past three months, the stock has validated these fundamentals through a 47.5% advance.

The Zacks consensus rating of #2 (Buy) reflects this optimism. Still, investors should recognize that revenue growth and backlog expansion don’t guarantee profitability—a metric where FCEL still lags. For risk-tolerant investors with a multi-year horizon, the risk-reward appears favorable. For conservative investors, waiting for tangible profitability improvements might be prudent.