Will Good Times Continue for Capstone?

Jun. 2.11 | About: Capstone Turbine (CPST)

It's a been a huge fiscal fourth quarter so far, at least in terms of the growing number of sales orders being received from around the globe, for Capstone Turbine (NASDAQ:CPST), a company making its own imprint on the market of fueling the future. With quarterly results due next week, Capstone will be one to keep an eye on.

The upwards growth trend was confirmed with the third quarter results, announced earlier this year. Those results showed that Capstone had recognized over 50% more revenue from the same quarter of the previous year. That trend should continue with the pending announcement of the fiscal fourth quarter results, given the rather significant amount of orders and re-orders that rolled in during the early stages of the 2011 calendar year.

In a press release dated on Tuesday, May 31, the company announced that two of its low-emission microturbine units had been installed and commissioned in the Eastern-Sotchemyu-Talyu oil field in Russia as part of an order previously announced by the company's Russian distributor, BPC Engineering.

Concerns moving forward mainly stem from the rather modest profit margins that Capstone has thus far recognized, which fuels fears that -- even with the significant growth in sales -- the company will have trouble finally reaching the ultimate goal of profitability. Those concerns have led to an increase in short percentage, which reached the 20% mark as of a couple of weeks ago. The short interest could continue to weigh heavily on the CPST share price if concerns about the shallow profit margins persist, but any news event that triggers a short squeeze -- however minor it may be -- could push shares above the two dollar mark that has proven to be quite elusive.

A presidential mention earlier this year put Capstone on the map for many, and regardless of any existing concerns, it's hard to spin any negative out of the fact that the popularity of the company is growing, which has translated into a significant number of sales orders.

Keep an eye on June 14, the announced date for the earnings release, which will be followed by an after-hours conference call.

Disclosure: I am long CPST.