Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Clean Energy Fuels Corp Stock Up 19% on Earnings Beat: Here's What Investors Need to Know Today

By Jason Hall - Aug 10, 2016 at 2:25PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The natural gas refueling expert reported strong growth in several key metrics, while also continuing to drive down expenses and strengthen the balance sheet. There's a lot to like here.

The refuse industry continues to drive growth at Clean Energy Fuels. Image source: Clean Energy Fuels.

What: Shares of Clean Energy Fuels Corp ( CLNE 3.78% ) are up 18.9% at 1:27 p.m. EDT on August 10, following the release of the company's second-quarter earnings report after market close on August 9.

So what: Clean Energy delivered another strong financial and operating performance, handily beating Wall Street analyst estimates. Analysts were expecting the natural-gas-for-transportation leader to report a loss of $0.14 per share in the quarter, but the company delivered a $1.5 million profit, which works out to $0.01 per share. This was after delivering a profit in Q1, as well as a profitable fourth quarter of 2015, when adjusted for a non-cash loss related to cancellation of a debt agreement. 

There's more. Here are some of the highlights:

  • Revenue increased 24%, to $108 million.
  • Fuel volume sales increased 11%.
  • Fuel margins increased from $0.28 to $0.35 per gallon equivalent. 
  • SG&A expense fell 13%; this marked the fourth-consecutive quarter of lower SG&A, even as volumes have increased.
  • Interest expense fell 22%.
  • Capital expenditures are expected to be $25 million this year, down 10% from 2015, and 75% less than in 2014.

Clean Energy also made some big improvements in its balance sheet so far this year. The company had more than $572 million in debt to start 2016, with $150 million of that due before September. As of July 30, the company had paid off all of its 2016 debt obligations, while retiring some of its 2018 notes, as well, reducing its total indebtedness to $406.4 million, with no major maturities until 2018. 

Now what: Even after today's big bounce, Clean Energy shares are still well down from prior highs as the market continues to vote on the company's prospects based on oil prices:

CLNE Chart

CLNE data by YCharts.

This is an excellent example of when correlation is not causation.

Yes, low oil prices aren't good for Clean Energy Fuels, because it cuts into the price advantage that natural gas provides. But even as oil prices have fallen, Clean Energy's steady volume growth has proven that there is still demand, and a purely cheaper price isn't the only driver behind natural gas, which produces significantly fewer emissions and particulates than gasoline and diesel fuels. 

When factoring in the significant improvements in the balance sheet, sustainable reductions in capital spending and expenses, stronger margins, and a steady stream of growth, it's pretty easy to argue that today's Clean Energy Fuels is a better, stronger company than it was when the stock price was much higher.

Eventually, Mister Market seems likely to catch on. The question is, how long will it take for that to happen?

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Clean Energy Fuels Corp. Stock Quote
Clean Energy Fuels Corp.
$6.59 (3.78%) $0.24

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/07/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.