Clean Energy Fuels (CLNE, Financial) posted solid results in the recently reported third quarter. The company managed to post solid results on the back of good growth across its established businesses such as transit and refuse. The company is also seeing positive signs from the market and is gearing up to improve its performance in the future. It is also counting on its trucking business, which is also gaining steam. For future growth, Clean Energy will be focusing on its key growth drivers.
The natural gas fuels market will be a catalyst
It is seeing growth opportunities in the natural gas market. To hold a competitive position in the market, Clean Energy has recently made impressive moves with NG advantage and Mansfield. With these initiatives, the company will be in a strong position to deliver a large volume of natural gas to energy intensive customers. Clean Energy is pleased with this move and is confident that it will be a high growth market for it in future. To further support this, Clean Energy will be aggressively investing in this initiative in the next two years.
NG Advantage, operating on Clean Energy’s infrastructure, is expected to attract many potential customers. This will help companies to improve their profitability, and ultimately improve demand for Clean Energy's product.
The Mansfield joint venture is another key move by the company. With this new venture, Mansfield will work with haulers to transition their fleets to natural gas. The company has great expectations from this initiative. Having opened the first partnership station at Atlanta, Clean Energy is planning to open several more stations for this massive hauling market over the next years.
End-market growth
Its core businesses, including Transit, Refuse and Fleet services, continue to show positive response and are expected to grow further. In the Transit business, the company has also got into some Transit partnerships. Clean Energy expects these new Transit partners to contribute more in delivering more gallons in this sector. These are some of the bright spots that the company is thinking will drive better growth in Transit segment all over the space.
The new trucking business is also gaining steam. Clean Energy is seeing more heavy duty truck fleets and ordering from this segment. Seeing this, the company is expecting a ramp up in the demand for the engines in near term. This is not just enough, as the company is still signing new fueling deals which will drive the existing natural gas truck fleet orders. In addition, the company has also signed a deal with Dillon Transport which is one of the largest truck deals that the company has ever signed. It has a fleet of good 200 natural gas trucks. This will help the company to open stations for the customers across its network.
Conclusion
The company is narrowing its losses, and if we look at its growth prospects, the company’s earnings are expected to improve in the next five years. Also, the growing Transit, Refuse and new Trucking business are expected to further drive its revenue in the coming days, helping the stock gain much market share in the future. As of now the near term investors should stay away from the stock while the long term investors should definitely include Clean Energy Fuels in their portfolio as it is a good long-term holding.
