Why Clean Energy Fuels (CLNE) Is Climbing Before the Bell

NEW YORK (TheStreet) -- Clean Energy Fuels (CLNE) is climbing in pre-market trading after announcing it has opened two more America's Natural Gas Highway stations.

Before the bell, shares were up 3.8% to $9.28.

The natural gas producer said in a statement that it had opened stations in Amarillo, Texas, and Oklahoma City, Oklahoma, to "serve UPS' (UPS) growing heavy-duty LNG truck fleet."

Additional truck fueling agreements have also been announced for its nationwide network from Los Angeles to Jacksonville, Florida.

The Newport Beach, Calif.-based business also said it had been awarded $2.5 million in grant funds from Pennsylvania to build two public-access liquefied-compressed natural gas stations in the eastern region of the state.

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TheStreet Ratings team rates CLEAN ENERGY FUELS CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate CLEAN ENERGY FUELS CORP (CLNE) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow, poor profit margins, generally disappointing historical performance in the stock itself and generally high debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has significantly decreased to -$2.27 million or 171.41% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The gross profit margin for CLEAN ENERGY FUELS CORP is currently lower than what is desirable, coming in at 32.62%. Regardless of CLNE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CLNE's net profit margin of -38.02% significantly underperformed when compared to the industry average.
  • CLNE's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 34.31%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The debt-to-equity ratio of 1.21 is relatively high when compared with the industry average, suggesting a need for better debt level management. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 3.88, which shows the ability to cover short-term cash needs.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CLEAN ENERGY FUELS CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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