Will Capstone Turbine Corporation Turn a Profit This Quarter?

The microturbine maker has spent years growing its business, and consistent profitability for this exciting company could finally be within reach.

Feb 6, 2014 at 10:50PM

Capstone Turbine (NASDAQ:CPST) will release its quarterly report on Monday, and investors have been increasingly optimistic about the microturbine maker's immediate prospects. Yet, even though the company's stock rose recently to its best levels in almost three years, Capstone still has to demonstrate that its niche offerings give it a viable market that is too insignificant for larger rivals General Electric (NYSE:GE) and Caterpillar (NYSE:CAT) to go after.

Long-time Capstone Turbine shareholders have suffered more than their fair share of disappointments, as the stock has never come close to recovering from its 99% plunge between early 2000 and 2002. Lately, though, Capstone has managed to attract substantial orders that have led to dramatic revenue gains, with sales having quadrupled in the past five years. The question for Capstone, though, is whether it can start seeing enough of those revenues fall to the bottom line for the company to start posting profits. Let's take an early look at what's been happening with Capstone Turbine during the past quarter, and what we're likely to see in its report.

Source: Capstone Turbine.

Stats on Capstone Turbine

Analyst EPS Estimate


Year-Ago EPS


Revenue Estimate

$40.33 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Can Capstone earnings make it to breakeven this quarter?
In recent months, analysts have held their views on Capstone earnings steady, with expectations of a $0.05-per-share loss for the full fiscal 2014 and a $0.01-per-share profit in 2015. The stock has done well, jumping 24% since early November.

Capstone's most recent quarterly report showed just how much progress the microturbine maker has made recently. Revenue soared 17% from the year-ago quarter and by an even more substantial 45% sequentially compared to the previous quarter. Capstone's losses narrowed to just $0.01 per share. With a 6% jump in backlogs to almost $150 million, Capstone is in much better shape from a sales standpoint than at any other point in its history.

The biggest appeal of Capstone's systems is that they can provide power even in remote locations. For instance, in December, the company said it had sold several microturbines to customers on offshore oil and gas platforms, demonstrating the utility of having readily available electricity sources far from any established grid-based power. Those orders only add to Capstone's penetration of the energy industry, with many companies using Capstone products to get power to remote shale plays off the grid. Recent international orders from Russia and elsewhere also represent a small part of the global potential Capstone has.

Yet, Capstone has a couple of threats. One is that if microturbine solutions become popular enough, General Electric and Caterpillar might well start modifying their larger-scale high-efficiency power-generation offerings toward the smaller-customer market. The other could come from the solar industry. With the rise in residential and small-commercial solar installations thanks to the success of SolarCity (NASDAQ:SCTY) and SunPower (NASDAQ:SPWR) in providing easy financing, demand for Capstone's microturbines could come under pressure as solar costs continue to decline.

In the Capstone earnings report, watch to see whether the company is able to keep its gross margins moving higher. With enough sales, Capstone could well reach profitability in the next year, marking an important milestone as it tries to overcome more than a decade of disappointment for loyal long-term shareholders.

Can Capstone keep profiting from the energy boom?
Record oil and natural gas production has been great news for Capstone, but it's important to find the right plays to maximize your profits from the energy boom. For this reason, the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 

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

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends SolarCity. The Motley Fool owns shares of General Electric Company and SolarCity. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information