Bloom Energy Outpaces Industry in a Year: How to Play the Stock?

Shares of Bloom Energy Corporation BE have skyrocketed 595.9% in the past year compared with the Zacks Alternative Energy - Other industry’s rally of 57.6%. The company has also outperformed the Zacks Oil & Energy sector’s return of 35.1% and the S&P 500’s rally of 19.8% in the same time frame.

Bloom Energy is benefiting from the rising demand for clean power from artificial intelligence-based data centers and customers turning to distributed energy solutions to avoid transmission and distribution bottlenecks.

Price Performance (One Year)

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Another industry player, Talen Energy Corporation TLN, operates a fleet of power generation assets that deliver reliable, dispatchable electricity to meet the around-the-clock needs of commercial, industrial and residential customers. Talen Energy has gained a whopping 160.5% in the past year, outperforming its industry, the sector and the S&P 500.

Bloom Energy is currently trading above its 50 and 200-day simple moving averages (SMAs), indicating a bullish trend. These moving averages are widely used by traders and analysts to identify potential support and resistance levels. The 50 and 200-day SMAs are particularly significant as they often serve as early indicators of a stock’s emerging uptrend or downtrend.

BE 50 & 200 Day SMAs

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Should you add BE to your portfolio solely based on its recent positive price movement? Let’s take a closer look at the underlying factors that can help investors determine whether this is the right time to include the stock in their portfolio.

Factors Acting in Favor of Bloom Energy

Demand for clean and reliable power is surging, driven by artificial intelligence-based data centers, crypto-mining operations and the reshoring of certain manufacturing activities in the United States. Bloom Energy addresses this demand through its Energy Server platform, which provides dependable, clean and cost-effective power solutions for businesses and utilities. Using proprietary solid oxide technology, the system generates electricity through the electrochemical conversion of fuels rather than combustion.

Bloom Energy is using its proprietary solid oxide technology, which generates electricity through electrochemical fuel conversion, eliminating the need for traditional combustion. Moreover, geopolitical tensions in the Middle East disrupt energy supplies, driving up natural gas and electricity prices. This enhances the value of distributed, on-site power solutions, such as Bloom Energy’s Energy Server system, which provides localized energy security and reduces reliance on power grids.

As electricity demand continues to outpace supply, shortages in transmission and distribution infrastructure are becoming more evident. Bloom Energy addresses this challenge with its Energy Server system, which can operate alongside the grid by connecting directly to a customer’s main electrical feed, helping reduce losses common in centralized grid networks. Its modular design allows multiple systems to be combined in various configurations, enabling scalable power generation from a few hundred kilowatts to several hundred megawatts.

Bloom Energy is steadily investing in research and development to enhance the efficiency of its modules, lower production costs and improve profit margins. The company stands to gain from government incentives supporting clean energy. Bloom Energy also plans to launch a new manufacturing facility in California to meet growing demand for its products.

BE’s Earnings Estimates Moving North

The Zacks Consensus Estimate for Bloom Energy’s earnings per share for 2026 and 2027 increased 48.39% and 13.39%, respectively, in the past 60 days.

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The Zacks Consensus Estimate for Talen Energy’s earnings per share for 2026 and 2027 increased 9.57% and 10.29%, respectively, in the past 60 days.

BE Stock Returns Better Than Its Industry

The return on invested capital (“ROIC”) measures how well a company generates returns on the money it invests. ROIC is a key indicator of a company's profitability and operational efficiency. The ROIC of the company indicates that it is investing money more efficiently than peers in the industry.

Bloom Energy’s ROIC has outperformed the industry average in the trailing 12 months. ROIC of BE was 4.12% compared with the industry average of 1.64%.

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Another company operating in the same industry, Ormat Technologies ORA, has an ROIC of 4.31%. The figure is better than the industry.

BE Is Trading at a Premium Valuation

Bloom Energy is currently trading at a premium valuation compared with its industry, with the forward 12-month price-to-sales (P/S) ratio at 12.61X. The industry is currently trading at 5.5X.

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Ormat Technologies is also trading at 5.87X, a premium valuation compared with its industry.

Rounding Up

Bloom Energy continues to demonstrate solid performance, driven by growing demand for clean energy and its capability to deliver rapid, on-site power solutions. Its systems can supply tailored energy directly to customers, bypassing the limitations of traditional transmission and distribution networks.

With rising earnings estimates, robust stock performance and a return on equity exceeding the industry average, Bloom Energy presents an appealing opportunity for investors.

However, considering the current premium valuation, we suggest investors maintain their position in this Zacks Rank#3 (Hold) stock.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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