AFC Energy (LON: AFC): Should you buy the green hydrogen-focused stock?

Highlights:

• Governments and industries are gradually moving to sustainable energy sources, hinting that the demand for such technologies will rise.
• AFC Energy's shares haven't been particularly good in terms of returns.

Shares of the London-listed alkaline fuel cell technology provider AFC Energy Plc (Lon: Afc) have nosedived over 70% in the past one year. This means that investors, who entered the stock at the top, must be in a tough spot as it has lost more than two-thirds of its value within a year. Another thing that the investors or potential investors must be wondering is whether it is a temporary bump given the overall market scenario or if there's something bigger at play.

How is the business performing?

Last week, the company posted its interim results for the half-year to 30 April 2022. The total revenue for the firm was £0.28 million, which is significantly higher than the £0.15 million it posted during the same period in 2021.

While the revenue saw a rise, so did the losses, and they grew even faster than the revenue. During the period, the losses climbed 135% to nearly £7.8 million from £3.3 million in HY2021. This means that for every £1 the firm earned in HY2022, it lost £28, which wouldn't be quite convincing for investors.

However, this doesn't necessarily mean that the company would continue this performance. It has received its first commercial order of S Series liquid-cooled fuel cell system from ABB. The order, worth up to £4 million, also emphasizes the fact that a global automation giant like ABB has put its trust in the company.

AFC says that the soaring prices of petrol and diesel, combined with the gradual shift to net-zero emissions, has promoted "unprecedented investment" in hydrogen developments.

The company has deployed its solutions at electric vehicle recharging stations, construction sites, and several other spots. With the governments and industries slowly moving their focus to sustainable energy, the demand for its products doesn't seem to be declining in the future.

Last month, the firm entered into an agreement with Kier Group Plc for the lease of new Power Tower hydrogen power generator units to be deployed at a construction site in southwest England.

Share price performance

As mentioned above, the share price has slumped by about 70% in the past 12 months. On a year-to-date basis, the price has fallen by 61.97% as of 5 July 2022. It has seen a downward trend since January 2021, following a two-month-long rapid ascent. A look at its performance in the past five years shows there isn't much difference between where the price was then and where it is at present.

The company currently holds a market cap of £139.56 million and is listed on the UK Stock Market AIM All-Share index. At 11:31 am GMT+1 on 5 July 2022, the shares were trading at 18.91, down by 0.47%. Its current earnings per share (EPS) stand at -0.01.

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