Capstone Turbine Corporation (CPST)
The alphaDIRECT Insight
The distributed power market has become a significant megatrend for investors in recent years. This includes a variety of renewables as well as conventional energy conversion technologies. The microturbine has been playing an increasing role in this market and Capstone is the clear leader in this technology platform. We believe the microturbine has a number of advantages as a distributed power source with a particular emphasis on the sub-three-megawatt market. We see a number of key drivers that investors should monitor as catalysts for the shares. Perhaps the most important is the drive to profitability and the company’s strategic effort to move to positive cash flow, which has a number of favorable implications for the shares as one would expect. Second is the stabilization and potential modest recovery of the energy markets, which have been a significant driver in recent years, but derailed with lower oil prices. Third is fully leveraging the company’s distribution network and financing entity, which could help to expand revenue growth and take additional market share. We view most of the risk today as execution risk and management’s ability to deliver on the break-even goal. We believe the technology is proven, the distribution network strong and the regulatory environment surrounding emissions to be favorable.
Capstone Turbine Corporation® is the world’s leading developer and manufacturer of clean-and-green microturbine power generation systems and was first to market with its high-efficiency air bearing turbine technology. Capstone has shipped over 9,000 microturbines to customers worldwide. Their innovative and award-winning systems have logged millions of documented runtime operating hours and are compliant with current and future emissions regulations.
With a total of 100 distributors and Original Equipment Manufacturers (“OEMs”) worldwide, Capstone’s low-emission microturbines serve multiple vertical markets with industry-leading reliability and efficiency. Capstone offers a comprehensive product lineup, providing scalable solutions from 30kW to 30MW. Capstone microturbines can also operate on a variety of gaseous or liquid fuels and are the ideal solution for today’s distributed generation needs. Capstone is a member of the U.S. Environmental Protection Agency’s Combined Heat and Power Partnership which is committed to improving the efficiency of the nation’s energy infrastructure and reducing emissions of pollutants and greenhouse gases. A UL-Certified ISO 9001:2015 and ISO 14001:2015 company, Capstone is headquartered in the Los Angeles area with sales and/or service centers in the United States, Latin America, Europe, Middle East and Asia.