Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.
Let’s turn to Capstone Turbine Corporation (NASDAQ:CPST). The micro-turbine maker has struggled for a long time, but some specialized applications have surfaced to give it huge business potential. Let’s take an early look at what’s been happening with Capstone Turbine over the past quarter and what we’re likely to see in its quarterly report next Monday.
Stats on Capstone Turbine
|Analyst EPS Estimate||($0.02)|
|Revenue Estimate||$33.7 million|
|Change From Year-Ago Revenue||22.5%|
|Earnings Beats in Past 4 Quarters||0|
Will Capstone Turbine generate a nice surprise?
Analysts don’t have much hope for Capstone anytime in the near future, seeing losses continuing throughout fiscal 2013 and 2014. The stock has been on the outs lately as well, falling more than 10% since early November.
Part of the reason for Capstone’s malaise is that it’s in a tough in-between part of its industry. On one hand, big institutions that want local power generation tend to turn to giants General Electric Company (NYSE:GE) or United Technologies Corporation (NYSE:UTX)‘s Pratt & Whitney division for co-generation infrastructure to provide more convenient or emergency sources of electricity. Capstone’s products are more suitable for smaller users, but so far, residential and small-business use hasn’t really ramped up.
But during the quarter, Hurricane Sandy highlighted the usefulness of having power ready. Consolidated Edison, Inc. (NYSE:ED)‘s transformer explosion was problematic for New York City residents, and FirstEnergy Corp. (NYSE:FE) had to deal with millions of power outages. Capstone managed to perform well in the wake of the storm, which could serve as a testimonial for future sales.
Still, what investors need to focus on in this quarter’s report is whether Capstone will manage to tap further demand from oil and gas producers seeking to power well operations in remote locations. As long as energy production remains in the forefront of the domestic economy, it will represent a golden opportunity for Capstone to turn profitable. Look for signs of success in that segment as an integral part of any long-term rebound for the stock.
The article Capstone Turbine Earnings: An Early Look originally appeared on Fool.com and is written by Dan Caplinger.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool owns shares of General Electric.
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