dreamingGlobe says Ballard Power a good stock for dreamers
2003-01-13 05:31 PT - In the News
The Globe and Mail reports in its Monday edition that the history of Ballard Power Systems has consistently been one of promise and no delivery. The Globe's Douglas Goold writes in the Market Intelligence column that Ballard shares closed Friday at $18 (Canadian), giving the firm a market value of almost $1.9-billion (Canadian). There are, of course, two ways to look at this imposing number. The first would be to point out that it is a tiny fraction of Ballard's capitalization at its peak. The second and more intelligent way, according to Mr. Goold, to evaluate Ballard shares is to ask yourself what you are getting for your $18 (Canadian). You are getting shares in a company with revenue of $80-million (U.S.), no earnings for the past 17 quarters, a cash-burn rate of $122-million (U.S.) to $142-million (U.S.) in 2002 and no profit in sight for five more years. First Albany analyst Sanjay Shrestha says she will remain skeptical on Ballard "until we have visibility with respect to cash generation and profitability." She says, "It is difficult to come up with a valuation support for the stock." Mr. Goold concludes that investors are buying into a dream when they buy Ballard shares.