Is It Too Late To Consider Bloom Energy (BE) After A 458.5% One Year Rally?

• If you are wondering whether Bloom Energy's recent share price makes sense, the key question is how that price stacks up against the underlying value of the business.
• The stock closed at US$145.32, with a 7 day return of a 2.3% decline and a 30 day return of a 2.8% decline, while the year to date return is 47.2% and the 1 year return is 458.5%.
• Recent headlines around Bloom Energy have focused on its role in cleaner power solutions and ongoing interest from investors who follow the energy transition theme. This backdrop helps explain why some traders are reassessing both the potential and the risks at the current share price.
• Even with that backdrop, Bloom Energy only passes 1 out of 6 undervaluation checks, giving it a valuation score of 1/6. Next we will look at how traditional valuation methods treat the stock and then finish with a more complete way to think about its value.

Bloom Energy scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Bloom Energy Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business might be worth by projecting its future cash flows and then discounting those back to today, so you can compare that value to the current share price.

For Bloom Energy, the model used is a 2 Stage Free Cash Flow to Equity approach based on cash flow projections in $. The latest twelve month free cash flow is about $30.4 million. Analyst estimates and subsequent extrapolations suggest free cash flow reaching about $1.1 billion by 2028, with further projected values in the billions through 2035. These later figures are model based rather than direct analyst forecasts after year five.

When all those projected cash flows are discounted back, the DCF model arrives at an estimated intrinsic value of about $138.55 per share. Compared with the recent price of $145.32, the model implies Bloom Energy is around 4.9% overvalued. This is a relatively small gap and within a range where the market and model are broadly aligned.

Result: ABOUT RIGHT

Bloom Energy is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Bloom Energy.

Approach 2: Bloom Energy Price vs Sales

For companies where earnings are less meaningful or volatile, the P/S ratio can be a useful yardstick because it compares what you pay per share with the revenue the business generates. It is still influenced by growth expectations and risk, since investors may accept a higher P/S if they expect stronger growth and feel comfortable with the company’s risk profile.

Bloom Energy currently trades on a P/S of 20.14x. That is close to the peer average of 20.27x and well above the Electrical industry average of 2.51x, which shows the stock is priced at a premium to the broader sector. Simply Wall St’s Fair Ratio for Bloom Energy is 10.29x, which reflects the multiple their model suggests based on factors such as earnings growth, profit margins, industry, market cap and risk.

This Fair Ratio is more tailored than a simple comparison with peers or industry averages because it adjusts for the company’s specific characteristics rather than assuming a one size fits all benchmark. Comparing the Fair Ratio of 10.29x with the current P/S of 20.14x suggests the shares are trading above the level implied by that model.

Result: OVERVALUED

P/S ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 23 top founder-led companies.

Upgrade Your Decision Making: Choose your Bloom Energy Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, which let you link your view of Bloom Energy’s story to a set of financial forecasts and a fair value estimate. All of this is available in a simple tool on Simply Wall St’s Community page that compares your Fair Value to today’s Price, updates automatically as new news or earnings arrive, and makes it clear how two investors can look at the same stock yet land on very different conclusions. For example, one Narrative may point to a Fair Value around US$40.20 while another points closer to US$157.00.

For Bloom Energy, here are previews of two leading Bloom Energy narratives that make it easier to compare different views:

Each narrative is built from a different set of assumptions, so you can see how your own view of the business lines up with other investors.

🐂 Bloom Energy Bull Case

Fair value: US$157.00 per share

Implied mispricing vs last close: about 7.4% above the recent price

Revenue growth assumption: 60.82%

• Assumes Bloom Energy captures a large share of rising power demand from AI data centers and digital infrastructure through fast deployment and modular products.
• Builds in higher long term profit margins supported by advanced analytics, digital optimization and recurring cash flows from more flexible, mobile deployments.
• Sees a larger market opportunity over time from electrification trends and net zero mandates, with the current share price sitting below this higher fair value estimate.

🐻 Bloom Energy Bear Case

Fair value: US$40.20 per share

Implied mispricing vs last close: about 261.4% above this fair value estimate

Revenue growth assumption: 35.43%

• Assumes tougher competition from zero carbon renewables, batteries and green hydrogen that limits Bloom Energy's long run pricing power and market share.
• Builds in pressure from regulation, capital intensity and possible dilution, with profit margins improving but staying below what more optimistic investors expect.
• Views the current market price as well above this fair value, with analysts in this camp seeing expectations for future earnings and margins as too optimistic.

If you want to see how other investors are framing these kinds of assumptions and how they translate into detailed valuation paths, you can use the Community Narratives to test which story feels closest to your own view and adjust the inputs from there.

Curious how numbers become stories that shape markets? Explore Community Narratives

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.

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