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Why Capstone Turbine's Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of microturbine maker Capstone Turbine (NASDAQ: CPST  ) jumped 11% today after the company announced a new order.

So what: CleanWorld Partners has ordered a Capstone C800 microturbine and a Capstone Clean Cycle 125 kW waste heat-to electricity generator. The order is expected to be installed this summer and the waste heat will be used in an on-site digester to produce biogas.  

Now what: I don't think one order really changes the game for Capstone, and I'd rather see more revenue growth and a profitable quarter before getting too excited. The company has lost $0.09 per share in the past year and analysts are only expecting to break even for fiscal 2014. Capstone has an interesting opportunity but those numbers don't show a good value, and this one order won't bring the company to profitability.

Interested in more info on Capstone Turbine? Add it to your watchlist by clicking here.

Read/Post Comments (12) | Recommend This Article (7)

Comments from our Foolish Readers

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  • Report this Comment On June 03, 2013, at 6:11 PM, acobblersson wrote:

    "I don't think one order really changes the game for Capstone, and I'd rather see more revenue growth and a profitable quarter before getting too excited."

    Travis, please take a fews steps back so that you do not lose the forest for the tree. The one order today is significant, not because it is @ $1M sale, but because it is a new successful application of CPST products (along with partner GE) in a large and growing global market. And, it is not this "one order" that has driven the price up over 40% since May 20th. Take a look at the growing diversity and trajectory of sales and product applications and you will see that there have been recent sales in Russia, China, Canada, Colombia, etc. for buildings, offices and schools, UPS data centers, pipelines, etc..

    The company is confidently projected to be profitable within a year. This company has spent @$500M over 15 unprofitable years to reach this milestone. That investment has already been made, the company's revenues are growing @ 30% annually, profitability is upon them, and the stock is beginning to undergo a significant revaluation. From my vantage point, it looks like the Great North Woods. You might want to take another look yourself.

  • Report this Comment On June 03, 2013, at 6:21 PM, david4646 wrote:

    Travis we enjoy your work but you got this one wrong. Today's order was just the most recent in a series as noted above. This company finally has some traction and it seems more than a bit near sighted to attribute today's pop to a single order.

    Feel free to look back over the more recent info and data.


  • Report this Comment On June 03, 2013, at 9:40 PM, mstavy wrote:

    acobblersson You stated " The one order today is significant, not because it is @ $1M sale, but because it is a new successful application of CPST products (along with partner GE) in a large and growing global market." Where is it reported that CPST and GE are partners?

  • Report this Comment On June 03, 2013, at 9:59 PM, acobblersson wrote:

    Again, as you look deeper, the strength of CPST's move has much more depth than any single sale PR. The series of events taken together seem to be creating a high level of confidence in buyers.

    "GE Energy's collaboration with Capstone underscores the reality that there is no one 'magic bullet' that will solve all of the country's energy and environmental challenges," said Brad Garner, President—heat recovery solutions for GE's Gas Engines business. "Having the ability to offer GE's Clean Cycle heat recovery solution in addition to Capstone's microturbine technology showcases how different distributed energy applications can be leveraged in innovative ways to help California achieve its renewable energy production and efficiency goals."

  • Report this Comment On June 04, 2013, at 12:22 AM, henry52 wrote:

    Glad to see this stock moving again but remember it sold for $4.00 year's ago. When 9/11 was in the news I hope it has the legs to move higher.

  • Report this Comment On June 04, 2013, at 4:19 AM, lordjrk wrote:

    Funny that this is coming from a fool writer, considering the Fool is the ones who alerted me to this company in the first place. Can you say backpedal? But like the rest of the commenters 1 order does not make or break a company but 1 successful order can move more orders from competitors.

  • Report this Comment On June 04, 2013, at 12:55 PM, mstavy wrote:

    Acobblersson--Thank you for your prompt response about GE. The Capstone Clean Cycle 125kW (CC125) waste heat-to-electricity generator is from an arrangement with Calnetix Power Solutions. CPST bought their 100kW Microturbine Business and Entered Into an Exclusive Agreement to Distribute the 125kW Zero Emission Waste Heat Recovery Generator. I do not know what produces are covered by the GE agreement. The CC125 uses the Organic Rankine Cycle. The CPST CleanWorld Partners energy system is very practical and leading edge. Hopefully it is cost effective.

  • Report this Comment On June 04, 2013, at 4:26 PM, acobblersson wrote:

    mstavy -- GE purchased all that was left of Calnetix Power Solutions after Capstone had already purchased Calnetix's microturbine division. GE and Capstone then agreed through 2016 to produce the Organic Rankine Cycle CC 125 with GE manufacturing and suppling essential parts.

  • Report this Comment On June 04, 2013, at 6:24 PM, wterry55 wrote:

    So what that the stock popped??????

    I'll tell you what.... IT'S A DOLLAR STOCK!!!!!!

    THATS WHAT.... IT ALIVE & WELL!!!!!!!

  • Report this Comment On June 04, 2013, at 7:11 PM, almo52 wrote:

    Folks take a look at the new backlog posted by Capstone in Q1 2012. It was 56MW. Most of that will be shipped in the 1st Q of 2013. If you assume 80% of it will ship and a 1.25 factor for revenue (they have been doing better than that) and a GMargin of 17% (last guidance) your get a GM of $9.5 Million. That's should cover the SG&A and R&D. So they have a real chance at putting up a profitable quarter! That's why the stock is moving. Also management is very motivated to post a very strong quarter given their need to stay above $1 for 180 days to stay listed on NSDQ.

  • Report this Comment On June 04, 2013, at 8:13 PM, mstavy wrote:

    First point, there is a typo. My comment above should read…I do not know what "products" are covered in the GE agreement…

    Second point, this project is technically ground braking, leading edge, avant–garde, very Rub Goldberg, even quite clever. All the waste heat produced from operation of the C800 will heat an on-site digester and, along with waste heat from the digester, run the CC125 -- all without any need for additional fuel. Biogas produced by the digester, which sits atop a landfill, will fuel the clean-and-green C800.

    Third point, hopefully this project will be profitable to both the owner and to the installer and more important for CPST shareholders, that CPST has enough backorders so that it can profitability manufacture in series both the C800 and the CC125. Otherwise, anyone who is long CPST is a Fool.

  • Report this Comment On June 07, 2013, at 7:27 AM, mstavy wrote:

    Acobblersson--Thanks for sharing your research on GE and Calnetix Power Solutions. Do you know what happens after 2016? For now GE is a parts supplier and CPST is the OEM, correct? It must be nice to get parts from GE.

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