Clean Energy Fuels Corp. Earnings: Will the Stock Bounce Back?

On Thursday, Clean Energy Fuels (NASDAQ: CLNE  ) will release its quarterly report, and shareholders are still reeling from the hit that they took earlier this year. Some investors believe that the prospect of new battery technology from Tesla Motors (NASDAQ: TSLA  ) makes it a competitor to the natural-gas network, but Clean Energy Fuels remains convinced that, with natural-gas truck engines from Westport Innovations (NASDAQ: WPRT  ) and other manufacturers set to take advantage of lower nat-gas prices, its network will remain a critical link for commercial transportation once more trucking companies start converting.

Natural gas is a huge opportunity given its abundance, but it has historically not been used as a major source of transportation fuel because of a lack of infrastructure. Clean Energy Fuels has sought to change that by providing a nationwide network of nat-gas fueling stations for vehicles that use the fuel. With the prospect of competing networks and concerns about rising natural gas prices recently, can Clean Energy Fuels keep growing? Let's take an early look at what's been happening with Clean Energy Fuels during the past quarter, and what we're likely to see in its report.


Source: Clean Energy Fuels.

Stats on Clean Energy Fuels

 

 

Analyst EPS Estimate

($0.30)

Year-Ago EPS

$0.03

Revenue Estimate

$89.95 million

Change From Year-Ago Revenue

(3.3%)

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

Can Clean Energy Fuels earnings get back on track?
Analysts have gotten a lot more pessimistic about their views on Clean Energy Fuels earnings in recent months, widening their first-quarter loss estimates by more than $0.10 per share, and almost tripling their full-year 2015 loss projections. The stock has gotten rocked, as well, falling 23% since the end of January.

Two events were primarily responsible for the drop in Clean Energy Fuels stock. In early February, a Seeking Alpha report argued that compressed natural gas was a better solution than liquefied natural gas, and shares sank dramatically despite reassurances from Clean Energy Fuels that the company has just as much capacity to provide CNG services as LNG services. Then, though, Clean Energy Fuels disappointed investors with its fourth-quarter earnings later that month, which showed revenue declining 14%, and a wider loss than expected. With delivery volumes growing at just a 13% pace, Clean Energy Fuels didn't demonstrate the huge growth potential that shareholders want to see over the long run.

Source: Clean Energy Fuels.

Clean Energy Fuels isn't the only company struggling from the slow adoption of natural-gas technology. Westport Innovations also saw its growth decelerate abruptly. At issue is the rise in natural gas prices during the winter, which exposed the downside of committing to expensive nat-gas conversions. If prices keep climbing, then it'll take longer for conversions to pay off from a fuel-cost savings standpoint, and that could deter many users from getting those modifications made, hurting both Westport and Clean Energy. Still, Clean Energy Fuels is working hard to strengthen its position, opening two new LNG stations about a month ago, and announcing a broader partnership with delivery giant UPS to use the new stations as part of its growing network.

The bigger question facing Clean Energy Fuels is whether natural gas will prove to be the winning technology for transportation. Some see Tesla Motors and its newly announced gigafactory for battery production as affirming the advantages of electric vehicles over fossil-fuel driven trucks. Yet, Clean Energy CEO Andrew Littlefair believes that Tesla is not a competitor, noting that it could take decades for battery technology to advance far enough to allow for the heavy loads that truckers carry.

In the Clean Energy Fuels earnings report, watch closely to see how well the company is dealing with its ongoing losses. With high-profile backing from energy pioneer T. Boone Pickens, Clean Energy Fuels has potential financial support; but that doesn't mean it can go on losing money indefinitely without having negative consequences for shareholders.

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Read/Post Comments (5) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 07, 2014, at 6:33 PM, davehall77 wrote:

    Battery technology will NEVER be able to replace fossil fuel in a heavy duty truck. People who believe otherwise simply don't know what they're talking about. Trains can be powered by electric motors only because a diesel engine is turning the el generator. And, by the way, the fuel for these train diesels will be powered by natgas eventually.

  • Report this Comment On May 08, 2014, at 8:35 AM, smacunalum wrote:

    As an owner I am greatly disappointed in the performance of this company. With all the announcements of deals last fall, there doesn't appear to be any added revenue yet AND the loss is per share is about doubling - going by analyst estimates. This is troubling. Does this company have working economic model? Are losing business as fast as they are gaining it?

    I have a feeling I am about to get slaughtered.

  • Report this Comment On May 08, 2014, at 5:51 PM, callumturcan wrote:

    @smacunalum this is a long term play on a natural gas highway being completed 5 years down the road. It's a buy, hold, and sit in your trading account. If you truly believe LNG and CNG powered trucks are going to be actively replacing diesel powered trucks over that time frame, which is what appears to be happening currently, then you don't need to worry just yet as long as you are confident in the long term thesis. I would still be wary of continuous losses (can't run on nothing forever), which is why you should always keep up to date with speculative stocks like CLNE, but the long term thesis for a shift towards natural gas powered vehicles, particularly in the commercial space (semi-trucks and other large vehicles), still looks fairly strong at this point.

  • Report this Comment On May 12, 2014, at 6:31 PM, stevebry56 wrote:

    Clean Energy issued debt of $294 million in the first three quarters of fiscal year 2013, taking its total liabilities to $594 million as of the end of third quarter fiscal year 2013. The company is expected to continue issuing more debt in fiscal year 2014 http://goo.gl/v1vRtP

  • Report this Comment On May 14, 2014, at 7:26 AM, survive5418 wrote:

    CLNE's CEO mention in the conference call on the 8th of May that they are close to profitability

    "From an adjusted EBITDA perspective we were negative by $7 million this quarter. "

    To me it doesn't seem that close because on a GAAP basis there is still quite a bit of cost to cover, at least $21 million more in this quarter alone. Base on revenue of $95 million, $21 million is quite a bit of money. It would take many years to cover this ground.

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