Capstone Turbine Earnings: An Early Look

Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Let's turn to Capstone Turbine (NASDAQ: CPST  ) . The micro-turbine maker has struggled for a long time, but some specialized applications have surfaced to give it huge business potential. Let's take an early look at what's been happening with Capstone Turbine over the past quarter and what we're likely to see in its quarterly report next Monday.

Stats on Capstone Turbine

Analyst EPS Estimate

($0.02)

Year-Ago EPS

($0.03)

Revenue Estimate

$33.7 million

Change From Year-Ago Revenue

22.5%

Earnings Beats in Past 4 Quarters

0

Source: Yahoo Finance.

Will Capstone Turbine generate a nice surprise?
Analysts don't have much hope for Capstone anytime in the near future, seeing losses continuing throughout fiscal 2013 and 2014. The stock has been on the outs lately as well, falling more than 10% since early November.

Part of the reason for Capstone's malaise is that it's in a tough in-between part of its industry. On one hand, big institutions that want local power generation tend to turn to giants General Electric (NYSE: GE  ) or United Technologies' (NYSE: UTX  ) Pratt & Whitney division for co-generation infrastructure to provide more convenient or emergency sources of electricity. Capstone's products are more suitable for smaller users, but so far, residential and small-business use hasn't really ramped up.

But during the quarter, Hurricane Sandy highlighted the usefulness of having power ready. Consolidated Edison's (NYSE: ED  ) transformer explosion was problematic for New York City residents, and FirstEnergy (NYSE: FE  ) had to deal with millions of power outages. Capstone managed to perform well in the wake of the storm, which could serve as a testimonial for future sales.

Still, what investors need to focus on in this quarter's report is whether Capstone will manage to tap further demand from oil and gas producers seeking to power well operations in remote locations. As long as energy production remains in the forefront of the domestic economy, it will represent a golden opportunity for Capstone to turn profitable. Look for signs of success in that segment as an integral part of any long-term rebound for the stock.

Will GE crush Capstone?
General Electric has made huge inroads in its core industrial space lately, and energy infrastructure is one of its focuses. Given its size, GE has huge advantages over Capstone in grabbing up the most lucrative business opportunities. Learn more about whether General Electric is a buy right now in our premium research report on the conglomerate, in which our top analysts break down GE's multiple businesses. You'll find reasons to buy or sell GE, and you'll receive continuing updates as major events unfold during the year. To get started, click here now.

Click here to add Capstone Turbine to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


Read/Post Comments (3) | Recommend This Article (8)

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  • Report this Comment On February 08, 2013, at 12:05 PM, kthor wrote:

    cpst has inept management much like SD and CHK... but good product

  • Report this Comment On February 08, 2013, at 2:50 PM, rebellemming wrote:

    Sorry,kthor, but have to disagree. Yes, the product is good (I hope!!) so why in the aftermath of Sandy is that even worth mentioning? Why?--because management could not resist the lemmings urge to follow the piper of ego (ie its about ME and my product) and take bows for that fact rather than deflecting that praise to their customers wisdom and value realized by chosing our product. But management had cocktail parties around the world to attend. More ego boosts--are actual sales not the responsibilty of the sales people?

    Management is not so much inept as just plain not managing. If and when they decide to reset goals to align with the business 101 "Theory of the firm" (profit) and manage the total company including sales/marketing, then I'm sure we will find them "ept"!!

  • Report this Comment On February 08, 2013, at 5:42 PM, lanceim59 wrote:

    "Inept" is a word but "ept" is not. Look it up yourself in the dictionary.

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