Can Clean Energy Fuels (CLNE) Boost Investor Confidence With Its Q2 Earnings?

Clean Energy Fuels Corp. (CLNE), a pioneer in procuring and using renewable natural gas (RNG), will soon report its fiscal 2024 second-quarter results, which ended June 30. In this piece, we will determine whether Clean Energy can boost investor confidence with its upcoming report.

Valued at $544.76 million, Clean Energy provides natural gas as an alternative fuel for vehicle fleets in the U.S. and Canada. It supplies RNG, compressed natural gas (CNG), and liquified natural gas (LNG) for medium, and heavy-duty vehicles and offers operation and maintenance services for vehicle fleet customer stations.

Recently, CLNE has made significant strides, particularly in expanding its RNG production and distribution network. The company sold 58 million gallons of RNG during the first quarter, marking an 8.6% year-over-year increase. It also opened two new fueling stations in Texas and completed a major dairy farm RNG digester project worth $26 million.

For the second quarter (ended June 2024), analysts expect a loss per share of $0.02, which is twice the loss of $0.01 per share reported in the prior quarter. On the contrary, the company’s revenue for the same period is expected to increase 15.9% year-over-year to $104.92 million.

Clean Energy exceeded expectations in the first quarter, with revenue of $103.71 million, surpassing analysts’ expectations of $99.69 million.  Additionally, the company reported a non-GAAP loss per share of $0.01, which was better than the forecasted loss per share of $0.03. Given this performance, there is potential for another beat in the upcoming earnings report.

Shares of CLNE have plunged 50.7% over the past year and 36.3% year-to-date to close the last trading session at $2.44. Also, the stock has declined 16.7% over the past month.

Let’s look at factors that could influence CLNE’s performance in the upcoming months.

Weak financials

For the first quarter that ended March 31, 2024, CLNE’s total revenue decreased 21.5% year-over-year to $103.71 million. Its product revenues fell 25.3% from the year-ago value to $89.41 million. CLNE’s operating loss for the quarter stood at $9.31 million.

The company reported a non-GAAP net loss of $2.33 million or $0.01 per share, compared to the previous year’s loss of $15.89 million or $0.08 per share. In addition, its net cash outflows from operating activities amounted to $19 million, compared to an inflow of $2.59 million in the same period last year.

As of March 31, CLNE’s cash, cash equivalents and current portion of restricted cash reduced to $91.41 million from $106.96 million recorded as of December 31, 2023.

Mixed Analyst Expectations

Analysts expect CLNE to post a loss per share of $0.01 in the third quarter, ending September 2024. However, its revenue for the same quarter is expected to increase 11.3% year-over-year to $106.37 million.

For the fiscal year ending December 2024, CLNE’s loss per share is expected to be $0.04, indicating a 26.7% year-over-year increase. On the contrary, its revenue for the current year is forecasted to grow marginally from the prior year period to $430.28 million.

Dimmed Profitability

CLNE’s trailing-12-month gross profit margin of 26.40% is 40.9% lower than the industry average of 44.65%. Likewise, its trailing-12-month asset turnover ratio of 0.34x is 31% lower than the industry average of 0.50x.

Moreover, its trailing-12-month EBITDA margin of negative 1.54% is lower than the industry average of 34.53%. CLNE’s trailing-12-month ROCE, ROTC, and ROTA of negative 11.17%, negative 3.14%, and negative 6.41% compares to their respective industry averages of 13.81%, 7.54%, and 5.61%.

POWR Ratings Reflect a Weak Outlook

CLNE’s bleak fundamentals are reflected in its POWR Ratings. The stock has an overall D rating, equating to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. CLNE has a D grade for Quality, consistent with its lower profit margins. It also has a D grade for Stability. CLNE’s 24-month beta of 2.22 justifies the Stability grade.

Within the D-rated Energy - Services industry, CLNE is ranked #46 out of 51 stocks.

Beyond what I have stated above, we have also given CLNE grades for Growth, Value, Momentum, and Sentiment. Get all CLNE ratings here.

Bottom Line

Despite CLNE’s rebound from the previous year's losses and management's upbeat report on exceeding its own expectations, the company still faces substantial challenges. The first quarter of fiscal 2024 saw a decline in total revenue, significant cash outflows from operating activities, and declining cash reserves.

With a projected net loss (between $101 million and $111 million) for the year and ongoing operational struggles, CLNE's journey to regain investor confidence through its upcoming earnings report remains critical amidst a challenging financial landscape.

Given CLNE’s weak financials, declining profitability, and bleak near-term prospects, it could be wise to avoid investing in this stock now.

Stocks to Consider Instead of Clean Energy Fuels Corp. (CLNE)

Given its uncertain short-term prospects, the odds of CLNE outperforming in the weeks and months ahead are compromised. However, there are many industry peers with much more impressive POWR Ratings. So, consider these three A-rated (Strong Buy) stocks from the Energy - Services industry instead:

Vibra Energia S.A. (PETRY)

Trican Well Service Ltd. (TOLWF)

MRC Global Inc. (MRC)

To explore more A and B-rated energy stocks, click here.

What To Do Next?

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CLNE shares were trading at $2.61 per share on Friday afternoon, up $0.17 (+6.97%). Year-to-date, CLNE has declined -31.85%, versus a 19.06% rise in the benchmark S&P 500 index during the same period.

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.

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