Clean Energy Fuels Corp. Prepares for Q3 Earnings Release
Natural gas supplier Clean Energy Fuels Corp. CLNE is set to announce its third-quarter 2024 results on Nov. 6, after the market closes. Analysts predict a loss of 2 cents per share, with revenues expected to reach $105.2 million, according to the Zacks Consensus Estimate.
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In the last month, estimates for this quarter have stayed the same. The projected loss stands in contrast to the break-even earnings recorded in the same quarter last year. Nevertheless, the revenue forecast indicates a year-over-year increase of 10.1%.
For the entire year, revenue estimates are at $414.5 million, suggesting a 2.5% year-over-year decline. The EPS forecast for 2024 remains at a loss of 8 cents, pointing to a significant erosion of approximately 33.3% compared to previous periods.
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Over the past four quarters, the Newport Beach, CA-based renewable energy company managed to exceed EPS estimates three times, but fell short once, leading to an average earnings surprise of 60.4% as illustrated in the chart below.
Clean Energy Fuels Corp. Price and EPS Surprise
Clean Energy Fuels Corp. price-eps-surprise | Clean Energy Fuels Corp. Quote
Understanding Q3 Performance Expectations
The third-quarter results for Clean Energy are likely to reflect increased sales volume of renewable natural gas (RNG). Estimates suggest the total RNG volume could reach 60 million gallons, up from 56.7 million gallons in the same quarter last year. This expected rise in fuel sales, despite falling natural gas prices, is projected to enhance revenue streams.
According to their second-quarter results, CLNE showed some recovery. While reporting a net loss, the company achieved a positive non-GAAP EPS and an adjusted EBITDA of $18.9 million, improving from $12.1 million in the previous quarter. Robust operating cash flow of $21.4 million for the first half of 2024, a considerable increase from negative cash flow in the same timeframe last year, supports this trend. Further progress is anticipated in the upcoming quarter.
Nonetheless, Clean Energy is likely facing additional costs this quarter. Their total operating expenses rose 15% year-over-year to $134.3 million in the second quarter of 2024, a trend expected to continue between July and September of this year.
Recent Price Trends and Valuation Analysis
Over the past six months, Clean Energy stocks have outperformed both the industry and the S&P 500.
CLNE 6-Month Stock Performance
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However, from a valuation perspective, CLNE appears less attractive. Its Enterprise Value to EBITDA ratio does not present favorable comparisons to similar firms in the renewable energy sector, especially considering its market cap has dropped to $650 million from a previous high of $3.5 billion. The stock’s Value Score of D reflects its low share price and weak valuation appeal.
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Evaluating Clean Energy’s Future: A Cautious Stance
As CLNE expands its control over RNG production through joint ventures with BP plc BP and TotalEnergies TTE, the company is in a favorable position to take advantage of growing renewable fuel demand. Its collaborations with major customers like Amazon AMZN and initiatives with Tourmaline for fueling stations in Canada further strengthen Clean Energy’s market presence. However, concerns exist regarding its valuation risks for potential investors.
Image Source: Clean Energy Fuels Corp.
Clean Energy’s reliance on third-party RNG suppliers continues to be a hurdle. Even with strategic alliances, proprietary production accounts for less than 10% of its total RNG sales, limiting possible profit margins and exposing the company to fluctuations in pricing and supply challenges.
In conclusion, while Clean Energy may attract high-risk investors seeking growth opportunities, those with lower risk tolerance should proceed with caution. As clean energy stocks gain attention amid a greater focus on environmental sustainability, CLNE’s stock may still have potential for recovery.
As the third-quarter earnings date approaches, investors are advised to pay close attention to Clean Energy’s revenue growth, sales volume, and overall financial performance prior to deciding on actions related to this penny stock.
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