Earnings and revenue have been significantly on the rise over the past few quarters for Capstone Turbine (CPST), the maker of green and clean, low-emission microturbine units, and margins have also improved as the company eats its way through a large backlog of orders, but the share price has hardly budged from the dollar mark as investors still wait for more sure signs that profitability is in the bag.
Casptone closed the holiday-shortened session on Tuesday up by 2 percent on normal volume, but still below the modest highs achieved after CEO Darren Jamison appeared on CNBC's Fast Money earlier this year. Those highs, however, paled in comparison to the run that ensued following a mention of the company in a speech by US President Barak Obama in Brazil last year. CPST traded for over two bucks during the heights of that hype, but was unable to hold those highs following earnings reports of continued losses - hence the current day trading.
Although the hype has died down, the potential for Capstone to play a large role in fueling the future as a 'clean and green' play has not, especially given the reality that existing customers continue to come back for more.
Capstone announced on Tuesday that it had received a follow-on order from a "substantial oil and gas customer" in Southern California for two of its C1000 power packages. This follow-on order is significant not only because it validates the growing loyalty of the Capstone customer base, but also because it is proof that the customer base is confident and satisfied enough with services so far rendered to diversify its holdings of Capstone products to meet various clean energy needs. For example, the C1000s ordered by this large customer will augment a fleet of several C65 microturbine units that the customer already has installed at various locations in SoCal.
Kenda Burkhart, Vice President of Regatta Energy Solutions who serves as Capstone's distributor in the region, noted that, "This customer selected Capstone microturbines because they want the high reliability and low emission benefits of our products. They need the assurance of round-the-clock power at the critical facility and know that's precisely what Capstone microturbines deliver."
Capstone is also making headway in the international market and has also secured orders for such domestic applications as providing energy for hospitals and other commercial and private infrastructure.
It's common to see shares run a bit during the weeks leading into a Capstone earnings report, so with a new quarter upon us, investors will be looking for new clues that profitability is within reach. Until that goal is met, expect CPST to continue its volatile trend, which leaves room for the day, swing and momentum traders to also take advantage of the short-term moves.
Looking further down the road, however, Capstone has built a solid foundation of providing clean energy for multiple facets of the commercial and private sector, and has particularly taken advantage of the shale gas boom, since many of its customers use CPST's microturbines at various 'shale plays' around the US.
Still one to keep an eye on in the 'green and clean' sector.
Disclosure: Long CPST.