Clean Energy Fuels (CLNE -4.51%) will release its quarterly report on Thursday, and investors have become increasingly worried about the prospects for the company's network of natural-gas refueling stations. Potential competition from TravelCenters of America and Royal Dutch Shell (RDS.A) could give Clean Energy's Natural Gas Highway less of a grip over the industry. But potentially more importantly, the huge gains in natural-gas prices that have showed up in shares of the gas-price-tracking United States Natural Gas (UNG -5.04%) ETF raise questions about whether converting to this fuel is worth the cost.

Clean Energy Fuels has long sought to capture the potential from companies looking at cheap and plentiful natural gas as a mainstream commercial fueling source. As diesel prices soared and natural gas prices plummeted, the huge cost savings from the latter fuel made projects like building a nat-gas fueling network look extremely lucrative. Now, Clean Energy Fuels has to establish its superiority even as the economics of conversion are getting a bit less attractive -- at least in the short run. 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 report.

Source: Clean Energy Fuels.

Stats on Clean Energy Fuels

Analyst EPS Estimate


Year-Ago EPS


Revenue Estimate

$92.59 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

What's next for Clean Energy Fuels earnings?
Analysts have become less enthusiastic about Clean Energy Fuels earnings in recent months, keeping their fourth-quarter estimates steady but widening their loss projection for full-year 2014 by $0.07 per share. The stock has performed badly, falling more than 20% since mid-November.

Clean Energy's third-quarter results showed the extensive changes going on at the company lately. Although overall revenue declined, sales in its core refueling business actually grew, reflecting the company's 2013 sale of its BAF subsidiary to partner Westport Innovations (WPRT -1.20%). Even though the high cost of building out the network has weighed on earnings, Clean Energy's overall losses have narrowed, pointing to increased use of existing locations in a 17% jump in gallons sold for the quarter. Strong margins from fuel sales were also helpful, even though the company projected that those margins could drop back down in the fourth quarter.

But Clean Energy isn't just benefiting from its own proprietary network. The company made a deal with UPS (UPS -0.04%) to supply natural gas to the transportation giant's private fueling stations in Texas. These type of deals show the potential of Clean Energy's infrastructure know-how for customized applications, as well as in its own network.

Unfortunately, rising natural-gas prices have been bad news for Clean Energy Fuels, Westport Innovations, and other companies seeking to promote natural gas as an alternative to oil-based fuels. With the long winter, nat-gas prices have shot upward, and higher-than-usual drawdowns in inventories could keep prices high for months to come. That in turn will reduce the benefits of commercial fleet conversion, capping growth for Clean Energy's fuel sales.

The biggest hit to Clean Energy Fuels stock came earlier this month, when skeptics challenged the company's emphasis on liquefied natural gas and argued that new compressed-natural-gas technology could prove superior to LNG. Clean Energy Fuels responded by challenging assertions that CNG-based solutions could work efficiently and practically for typical refueling needs. Moreover, with substantial CNG operations of its own, Clean Energy Fuels CEO Andrew Littlefair believes the company can adapt no matter which form of fuel is best for a particular use.

In the Clean Energy Fuels earnings report, watch to see how the company moves forward with some of its more ambitious projects, including early efforts to build LNG terminals so that cargo ships can use the fuel for propulsion. With so many different potential uses for natural gas, Clean Energy Fuels has plenty of avenues for growth as long as the fuel remains economically viable as an alternative to conventional fuels.

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