Westport Innovations (NASDAQ:WPRT) will release its quarterly report on Wednesday, and investors have recently gotten concerned about the natural gas engine technology company's future prospects. The company's stock has fallen substantially over the past few months, and with Westport earnings expected to remain negative for the foreseeable future, shareholders have to be nervous about whether its partnerships with Clean Energy Fuels (NASDAQ:CLNE) and Cummins (NYSE:CMI) will lead to the long-term profitability that Westport is counting on materializing.

Westport Innovations has worked hard to broaden the appeal of its natural gas engine technology, collaborating with Cummins to produce nat-gas engines for the vehicle market and with Clean Energy Fuels to encourage the establishment of a nationwide network of natural gas fueling stations to support buyers of those vehicles. When will those initiatives pay off in profits for Westport? Let's take an early look at what's been happening with Westport Innovations over the past quarter and what we're likely to see in its report.

Stats on Westport Innovations

Analyst EPS Estimate

($0.50)

Year-Ago EPS

($0.59)

Revenue Estimate

$45.30 million

Change From Year-Ago Revenue

(41%)

Earnings Beats in Past Four Quarters

0

Source: Yahoo! Finance.

When will Westport Innovations make money?
In recent months, expectations about Westport Innovations earnings have gotten worse, with analysts widening their loss estimates for the third quarter and for the full 2013 and 2014 years by roughly 10%. The stock has plunged as well, falling 21% since late July.

The opportunity for Westport Innovations is huge, as transportation companies look for ways to cut costs by using lower-price natural gas as fuel. As Westport director of technology and development Sandeep Munshi told the Motley Fool, back in August, the abundance of natural gas as well as its clean-burning characteristics and its ability for use in larger engines gives it competitive advantages over both traditional gasoline/diesel engines as well as electric vehicles. But Munshi noted the challenges of getting necessary fueling infrastructure in place, both at the commercial level as well as in home refueling equipment.

Still, Westport investors haven't seen the benefits of its opportunity yet. Westport took a particularly big hit to its share price late last month, when the company decided to do a secondary offering of 6 million shares. The company expects to use the roughly $155 million in proceeds to further its technology for use in cars, trucks, and off-road and marine vehicles, as well as bolstering its overall production of equipment and components. That could be huge in weaning Westport away from dependence on Cummins, but investors still worry about the 10% dilution from the offering and its potential impact on their eventual profits if Westport is successful.

But the other major risk facing Westport Innovations and Clean Energy Fuels is that natural gas prices might not stay low enough to justify the costs of converting existing commercial trucking fleets to nat-gas engines. As plans to export U.S. natural gas by way of liquefied natural gas projects proceed, a rise in nat-gas prices could jeopardize the economic viability of the conversion, threatening Westport and Clean Energy's entire business model. Still, with Clean Energy having worked with GE Capital to finance future natural-gas truck purchases, smaller trucking companies will have an incentive to buy vehicles using Westport and Cummins engine designs.

In the Westport earnings report, watch to see how well the company's partnerships with Cummins and Clean Energy Fuels are holding up amid changes in the industry's dynamics. The longer Westport goes without getting closer to profitability, the more investors need to worry that the company might miss out on the promise of its revolutionary technology.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Clean Energy Fuels, Cummins, and Westport Innovations. The Motley Fool owns shares of Cummins and Westport Innovations. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.