Investors in Clean Energy Fuels Corp. (NASDAQ:CLNE) had a good week, as its shares rose 6.3% to close at US$2.11 following the release of its first-quarter results. In addition to beating expectations by 16% with revenues of US$86m, Clean Energy Fuels delivered a surprise (statutory) profit of US$0.01 per share, a sweet improvement compared to the losses that the analysts forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the current consensus, from the three analysts covering Clean Energy Fuels, is for revenues of US$296.3m in 2020, which would reflect a definite 16% reduction in Clean Energy Fuels' sales over the past 12 months. Earnings are expected to tip over into lossmaking territory, with the analysts forecasting statutory losses of -US$0.027 per share in 2020. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$286.6m and losses of US$0.05 per share in 2020. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a loss per share in particular.
Yet despite these upgrades, the analysts cut their price target 8.3% to US$5.50, implicitly signalling that the ongoing losses are likely to weigh negatively on Clean Energy Fuels' valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Clean Energy Fuels analyst has a price target of US$6.00 per share, while the most pessimistic values it at US$5.00. Even so, with a relatively close grouping of analyst estimates, it looks to us as though the analysts are quite confident in their valuations, suggesting that Clean Energy Fuels is an easy business to forecast or that the the analysts are all using similar assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. Over the past five years, revenues have declined around 5.2% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for a 16% decline in revenue next year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 9.2% per year. So while a broad number of companies are forecast to decline, unfortunately Clean Energy Fuels is expected to see its sales affected worse than other companies in the industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Clean Energy Fuels' future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Clean Energy Fuels analysts - going out to 2022, and you can see them free on our platform here.
It is also worth noting that we have found 3 warning signs for Clean Energy Fuels (1 is a bit concerning!) that you need to take into consideration.
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