Will Clean Energy Earnings Fuel Investor Excitement?

Clean Energy Fuels (CLNE -0.87%) will release its quarterly report on Thursday, and the natural-gas-fueling network's shares don't seem to reflect much enthusiasm among investors for the company's near-term prospects. With Clean Energy earnings not yet approaching profitability, it's important for the young company to keep shareholders excited about its long-term prospects as alternative fuel options gain traction across the nation.

Natural gas has always been a potentially cleaner-burning fuel, but adapting it to transportation uses was slow in coming. But the recent energy boom across the U.S. has led to cheap and plentiful nat-gas, making it more economically viable to consider even the massive capital expenditures necessary to transform the well-established petroleum-based fueling and transportation infrastructure already in place. Let's take an early look at what's been happening with Clean Energy Fuels over the past quarter and what we're likely to see in its quarterly report.

Stats on Clean Energy Fuels

Source: Yahoo! Finance.

Will Clean Energy earnings clean up this quarter?
Despite the red ink, analysts have actually gotten more optimistic about prospects for Clean Energy earnings in recent months, narrowing loss estimates by $0.02 per share for the June quarter, and by $0.08 per share for the full 2013 year. The stock, though, hasn't moved much, with declines of about 3% since early May.

So far, Clean Energy has made slow but steady progress in implementing its initiative to become "America's Natural-Gas Highway". In its first-quarter results in May, the company repeated that it had finished the first 70 stations of its network and produced fuel sales that were 14% higher than in the year-ago quarter, successfully using technology from General Electric (GE -2.11%) to quickly liquefy natural gas for transfer to vehicles without requiring massive facilities. So far, most of the demand has come from early adopting fleet vehicles, as mass-produced consumer nat-gas-fueled vehicles haven't moved the needle as most alternative fuel attention has centered on electric and hybrid vehicles.

One challenge of upfitting trucks to run on natural gas is cost, as Ford (F 0.08%) has estimated additional costs of upgrading its trucks and vans to run on either nat-gas or gasoline at $7,800-$12,500 depending on the model. But Westport Innovations (WPRT -3.93%) is working hard to come out with vehicles that will use Clean Energy's network, with Westport having bought out Clean Energy's nat-gas-vehicle business in June and committing to a joint marketing agreement. Moreover, Ford announced late last month that it would include F-150 models that are upgrade-ready as a relatively cheap $315 option, giving purchasers the ability to spend $7,500-$9,500 on an upgrade if they choose.

In the Clean Energy earnings report, watch for the company to give an update on the use of natural gas in commercial long-haul vehicles. Engines from Westport and Cummins (CMI -0.12%) are expected to boost use of nat-gas in commercial transportation, and when that happens, traffic for Clean Energy's fueling network should soar. As long as natural gas prices remain low enough to offer a competitive advantage over oil-based fuels, Clean Energy should continue to grow.

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