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3 Things to Watch When Clean Energy Fuels Stock Reports Tomorrow

By Rich Smith - May 4, 2016 at 8:15AM

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Perhaps surprisingly for a "natural gas stock," most of what we'll be looking at may be more tied to the price of oil.

CLNE Chart

Clean Energy fuel stock's price tracks the price of oil so closely, it's uncanny. CLNE data by YCharts.

Tesla and its battery-operated cars have been getting all of the press lately. But over at Clean Energy Fuels (CLNE 2.01%), they're still betting that natural gas-powered vehicles are the future of transportation. The nat-gas fuel supplier reports its fiscal Q1 earnings tomorrow.

Here's what we know today.

What analysts say:

  • Buy, sell, or waffle? According to data from S&P Global Market Intelligence, only four analysts follow Clean Energy Fuels stock. Two rate it a "buy," and two more are a "hold."
  • Revenue. These analysts expect to see revenues rise about 5% tomorrow to $89.9 million.
  • Earnings. They don't expect to see profits, but they believe losses might be cut by close to half -- to $0.18 per share. 

What management says:
2015 was a rough year for Clean Energy Fuels stock, marked by low natural gas prices and a "tough, low oil price market" that drove the company to report a record net loss of $134 million. Nonetheless, Clean Energy CEO Andrew Littlefair promised to "make progress and improve our results" while adjusting the company's "capital structure" to ensure it can survive additional losses.

What management does:
You'd ordinarily expect low gas prices to spur demand among customers for more cheap gas -- and to an extent, that's what has happened. In Q4, Clean Energy reported deliveries of 78.3 million gallons of fuel, an 8% year over year increase. On the other hand, the total increase in deliveries across the full year was 16%. So, in fact, growth slowed down in Q4. Meanwhile, after more than a decade of growth, revenues at Clean Energy declined for the first time last year, falling 10% in comparison to 2014 levels.

Profits-wise, low input costs helped Clean Energy grow its gross margins all year long and shrink the size of its operating loss. Net profit margins, though, were a different story:

Margins

9/14

12/14

4/15

7/15

10/15

12/15

Gross

25.1%

28%

28%

28.4%

30.7%

32.7%

Operating

(20.9%)

(12.8%)

(13.2%)

(13.1%)

(12.3%)

(11.2%)

Net

(32.3%)

(20.9%)

(22%)

(22%)

(20.9%)

(34.9%)

Data source: S&P Global Market Intelligence.

What to watch tomorrow
Perhaps the most important factor affecting Clean Energy Fuels stock is reflected in that first chart you see up above -- the one that shows the company's stock price almost exactly mirroring movements in the price of oil.

Management blamed "the tough low oil price market" for hurting its business last year, but for most of 2015, oil prices were actually much higher than they've been early this year. So, we'll first of all want to see what the much lower oil prices prevalent in Q1 2016 did to Clean Energy's business. Did they hurt it more than also-low nat-gas prices helped?

And what about the rest of this year? Recently, oil prices have moved back up to about $45 a barrel. But since $45 is still below the average prices seen last year, does management expect the move back up to be enough of an improvement to positively affect its business?

Third, and finally, did the low natural gas prices prevailing in Q1 do any good for spurring demand for natural gas as a transportation fuel? Did these low prices enable the company to continue expanding its gross margin, and did any of that improvement make its way down to the bottom line?

I have to say, seeing how things have gone for Clean Energy Fuels over the past few years, I'm not optimistic about how this will all play out. Still, the professionals seem to think we'll see an improvement -- we'll find out tomorrow if they were right.

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Stocks Mentioned

Tesla, Inc. Stock Quote
Tesla, Inc.
TSLA
$681.79 (1.24%) $8.37
Clean Energy Fuels Corp. Stock Quote
Clean Energy Fuels Corp.
CLNE
$4.57 (2.01%) $0.09

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