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Why Capstone Turbine Hasn't Powered Up This Year

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As we approach the halfway point for 2012, now's a good time to look back at what's happening with the stocks that interest you. By making sure you know the important things that a company accomplished -- as well as the setbacks it experienced -- you can make a better decision about whether it's a smart investment for your portfolio.

Today, let's take a look at Capstone Turbine (Nasdaq: CPST  ) . The company has worked hard to advance its microturbine electricity generators, but it's been slow going for Capstone to turn its promise into cold, hard cash. Let's take a quick look at how Capstone is doing so far this year.

Stats on Capstone Turbine

2012 YTD Return (11.2%)
Market Cap $308 million
Total Revenue, Most Recent Quarter $30.1 million
Year-Over-Year Revenue Growth, Most Recent Quarter 32.4%
Net Loss, Most Recent Quarter ($8.3 million)
CAPS Rating (out of 5) ***

Source: S&P Capital IQ.

Why is Capstone Turbine losing in 2012?
Capstone ended 2011 on an up note, as it announced a marginally profitable fiscal second quarter. But so far in 2012, both of its earnings announcements have been less favorable as the company has returned to posting substantial losses.

The biggest potential customers for Capstone are oil and gas drillers seeking available power at remote drilling locations. The company has already gotten huge orders from a company in the Eagle Ford area, and although Capstone hasn't identified the customer, both Chesapeake Energy (NYSE: CHK  ) and EOG Resources (NYSE: EOG  ) have a major presence there. Capstone also points to success in the Marcellus shale as well as in Africa and Russia.

The problem, though, is that Chesapeake and peers Encana (NYSE: ECA  ) and Southwestern Energy (NYSE: SWN  ) have taken steps to cut back on production levels. That in turn might reduce any demand for Capstone's products until natural gas prices start to rise.

With consecutive losses and falling cash balances on its balance sheet, Capstone Turbine hasn't lived up to its potential so far in 2012. For the company to reverse course and post some gains in the second half of the year, Capstone really needs to focus on the energy industry to build up a stable customer base and finally get itself profitable once and for all. Capstone will need some help from the natural gas market, but if things work out, then the stock could be well above $1 per share in the near future.

Still, Capstone doesn't look like ideal energy play right now. We've got another stock you should look at more closely. Read about it right here in The Motley Fool's special free report on the energy industry and its best prospects.

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

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. The Fool owns shares of Chesapeake Energy. Motley Fool newsletter services have recommended buying shares of Chesapeake Energy. 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 Fool has a disclosure policy.

Read/Post Comments (1) | Recommend This Article (5)

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 June 19, 2012, at 10:48 AM, Teacherman1 wrote:

    They are having some setbacks for now, but if you want to "get ahead of the curve", this is a good buy in price.

    While the focus most recently has been on the use of their products in the energy sector, they also have application in the commercial building area, and have some sales to hotels and others.

    Over the longer term, this will be a good, profitable company.

    My investing mantra, as it was when I was in RE investment much more than equities; is that "you make your money when you buy it". The eventual sale price will take care of itself.

    Not suggesting that anyone go in "whole hog", and load up their portfolio with it, but at this price, you could establilsh a reasonable position for a "nominal amount".

    JMO and worth exactly what I am charging for it.

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Related Tickers

10/21/2016 4:00 PM
CPST $1.10 Up +0.01 +0.92%
Capstone Turbine CAPS Rating: *
CHK $6.68 Down -0.23 -3.33%
Chesapeake Energy CAPS Rating: ***
ECA $11.07 Down -0.23 -2.04%
EnCana CAPS Rating: ****
EOG $93.88 Down -1.03 -1.09%
EOG Resources CAPS Rating: ****
SWN $11.59 Down -1.06 -8.38%
Southwestern Energ… CAPS Rating: ***