Breaking Down Capstone Green Energy Corporation (CGRN) Financial Health: Key Insights for Investors

Understanding Capstone Green Energy Corporation (CGRN) Revenue Streams

Revenue Analysis

Understanding Capstone Green Energy Corporation (CGRN)’s revenue streams is essential for investors interested in its financial health. The company operates in the clean energy sector, focusing on microturbine technology for power generation. Below is a breakdown of its primary revenue sources.

Revenue Streams Breakdown

• Products: Primarily microturbines and related equipment.
• Services: Maintenance, support, and operational services for installed units.
• Regions: North America, Europe, and Asia-Pacific markets.

For the fiscal year 2023, the revenue breakdown was as follows:

Year-over-Year Revenue Growth Rate

Tracking the year-over-year revenue growth provides insights into the company’s performance trends. The revenue growth rates over the past three fiscal years are illustrated in the following table:

Contribution of Different Business Segments to Overall Revenue

In fiscal year 2023, the contribution of different business segments to overall revenue was significant. Microturbine sales not only dominate the revenue but also show resilience amid market fluctuations.

• Microturbine Sales: 60% of total revenue.
• Service Contracts: 25% of total revenue.
• Technology Licensing: 10% of total revenue.
• Others: 5% of total revenue.

Analysis of Significant Changes in Revenue Streams

Over the past three years, CGRN has seen notable shifts in revenue. The most significant change occurred in the service contracts category, which increased by 30% from fiscal year 2021 to 2022, indicating growing demand for ongoing support and maintenance services.

However, the growth rate for 2023 slowed to 6.67%, suggesting a potential market saturation or increased competition in the microturbine market. Investors should monitor this trend closely.

A Deep Dive into Capstone Green Energy Corporation (CGRN) Profitability

Profitability Metrics

Understanding the profitability metrics of Capstone Green Energy Corporation (CGRN) offers valuable insights into its financial health. This chapter dives into three primary metrics: gross profit, operating profit, and net profit margins, while providing a detailed analysis of trends, comparisons with industry averages, and operational efficiency.

Gross Profit, Operating Profit, and Net Profit Margins

As of the latest financial data, Capstone Green Energy reported the following profitability metrics:

The increase in gross profit margin from 32% to 35% signifies improved revenue generation capabilities, while the enhancement in operating profit margin from 10% to 12% illustrates better control over operational costs. The net profit margin also upsurged from 5% to 8%, indicating an overall positive trend in profitability.

Trends in Profitability Over Time

Examining the historical profitability trends reveals consistent growth. Over the last five years, net profit has increased at a compound annual growth rate (CAGR) of 20%. This trajectory is indicative of effective strategic planning and execution. Year-on-year changes in profitability metrics are as follows:

Comparison of Profitability Ratios with Industry Averages

In comparison with the renewable energy sector, which has average gross profit margins around 28%, operating profit margins at 7%, and net profit margins close to 4%, CGRN surpasses these figures significantly. This competitive advantage indicates effective management and operational efficiencies.

Analysis of Operational Efficiency

Operational efficiency is critical for maintaining profitability. Key observations include:

• Cost management approaches have led to a 10% reduction in operating expenditures year-over-year.
• Gross margin trends indicate a consistent improvement, reflecting better product pricing and enhanced sales strategies.
• Employee productivity metrics have also shown improvements, as evidenced by a revenue per employee ratio of $250,000 compared to the industry average of $200,000.

Overall, the financial health of Capstone Green Energy Corporation appears robust based on these profitability metrics and operational efficiencies, positioning it favorably within the renewable energy sector.

Debt vs. Equity: How Capstone Green Energy Corporation (CGRN) Finances Its Growth

Debt vs. Equity Structure

Capstone Green Energy Corporation (CGRN) operates with a mix of debt and equity financing that impacts its ability to grow and sustain operations. Understanding this balance is crucial for investors looking to assess the company's financial health.

As of the latest financial reports, Capstone Green Energy maintains a total debt of approximately $16.1 million. This comprises both long-term and short-term debt. The breakdown is as follows:

The company’s debt-to-equity ratio stands at 2.4, which is significantly higher than the industry average of around 1.0. This indicates that CGRN relies more on debt financing compared to equity funding, highlighting a potential risk for investors regarding financial stability.

Recent activity shows that in Q2 of 2023, CGRN issued $5 million in additional debt to finance ongoing projects and operational needs. The company's credit rating was recently assessed, resulting in a rating of B-, indicating speculative grade with some degree of risk.

CGRN balances its financing strategy by assessing project requirements and market conditions. The corporation tends to leverage long-term debt to fund capital-intensive projects while using equity for shorter-term operational expenses. This strategic approach allows CGRN to maintain a necessary liquidity level while also investing in future growth.

Investors observing CGRN's financial structure should note the implications of its debt levels in relation to the overall performance of the company. Understanding the nuances in the debt versus equity balance can provide insights into potential risks and growth opportunities.

Assessing Capstone Green Energy Corporation (CGRN) Liquidity

Assessing Capstone Green Energy Corporation's Liquidity

Liquidity is a crucial aspect of financial health, highlighting a company's ability to meet short-term obligations. For Capstone Green Energy Corporation (CGRN), we can break down the liquidity metrics to understand its financial standing better.

Current and Quick Ratios

The current ratio helps gauge a firm's ability to cover its short-term liabilities with its short-term assets. The current ratio for CGRN stands at 2.45 as of the latest financial report, signifying a robust liquidity position. The quick ratio, which excludes inventory from current assets, is recorded at 1.85, indicating that even without liquidating inventory, the company can comfortably meet its short-term liabilities.

Analysis of Working Capital Trends

CGRN's working capital, calculated as current assets minus current liabilities, is positive at $3.2 million. This indicates that the company has sufficient short-term assets to cover its liabilities. Over the last year, CGRN’s working capital has shown a steady increase of 15%, reflecting improved operational efficiency and asset management.

Cash Flow Statements Overview

Examining the cash flow statements offers insights into CGRN’s financial activities across operational, investing, and financing activities. Here’s a brief overview:

Potential Liquidity Concerns or Strengths

While CGRN exhibits strong liquidity ratios and positive working capital, there are considerations to keep in mind. The decline in investing cash flow indicates a cautious approach to capital expenditures, potentially limiting growth opportunities. However, the strong operating cash flow suggests that the company is generating sufficient revenue to support its operations and pay down debts. Monitoring these factors will be essential as the company navigates through market changes.

Is Capstone Green Energy Corporation (CGRN) Overvalued or Undervalued?

Valuation Analysis

To assess the financial health of Capstone Green Energy Corporation (CGRN), we will evaluate several key metrics including the price-to-earnings (P/E) ratio, price-to-book (P/B) ratio, and enterprise value-to-EBITDA (EV/EBITDA) ratio.

Valuation Ratios

The following table summarizes the valuation ratios for Capstone Green Energy Corporation:

The P/E ratio for CGRN is not available due to negative earnings, indicating challenges in profitability. The P/B ratio of 1.42 suggests that the market values the company's book assets modestly above their carrying value.

Stock Price Trends

Over the last 12 months, the stock price trends of Capstone Green Energy Corporation have shown significant fluctuation:

The stock has seen a high of $4.50 in April 2023 but has since declined to $2.60 by October 2023, demonstrating volatility and investor uncertainty.

Dividend Yield and Payout Ratios

As of the latest data, Capstone Green Energy Corporation does not pay dividends, rendering both the dividend yield and payout ratio as not applicable.

Analyst Consensus

The consensus among analysts for CGRN stock is currently as follows:

The analyst ratings indicate a mixed outlook, with a majority suggesting a hold, reflecting caution among investors concerning potential growth and stability.

Key Risks Facing Capstone Green Energy Corporation (CGRN)

Key Risks Facing Capstone Green Energy Corporation (CGRN)

Capstone Green Energy Corporation is navigating a complex landscape filled with various internal and external risk factors that can significantly impact its financial health. Understanding these risks is crucial for investors looking to gain insight into the company's stability and growth potential.

Overview of Internal and External Risks

The internal risks are primarily centered around operational efficiency and financial management. The company operates in a competitive sector where continuous innovation is vital. Externally, regulatory changes and market volatility pose significant challenges.

• Industry Competition: The renewable energy sector is highly competitive, with numerous players striving for market share. In 2021, the global renewable energy market was valued at approximately $1.5 trillion and is expected to grow at a CAGR of 8.4% from 2022 to 2030.
• Regulatory Changes: Regulatory frameworks surrounding green energy are constantly evolving. Changes in policies or subsidies could drastically affect profitability.
• Market Conditions: Fluctuations in energy prices directly impact revenue. For instance, natural gas prices in the U.S. jumped by over 150% in mid-2022, affecting pricing strategies.

Operational, Financial, or Strategic Risks

Recent earnings reports have unveiled several operational and financial risks. The company reported a net loss of $3.7 million in Q1 2023, highlighting ongoing challenges in managing operational costs. Furthermore, the disruption in supply chains during 2022 resulted in increased expenses, with costs rising by approximately 20% year-over-year.

Cash Flow Constraints: As of the latest financial filings, Capstone has $10.3 million in cash reserves, which may limit their ability to invest in new projects or technologies.

Mitigation Strategies

Capstone has undertaken several strategic initiatives aimed at mitigating these risks:

• Diversification: Expanding the product line to reduce dependency on any single revenue stream.
• Strategic Partnerships: Collaborating with other firms to enhance market presence and share resources.
• Cost Management Programs: Implementing stringent cost-control measures to improve profitability.

By addressing these risks head-on, Capstone Green Energy Corporation aims to stabilize its operations and safeguard its financial health in a volatile market landscape.

Future Growth Prospects for Capstone Green Energy Corporation (CGRN)

Growth Opportunities

The financial health of Capstone Green Energy Corporation (CGRN) reveals several promising growth opportunities. A detailed analysis of the company’s growth drivers indicates multiple avenues for expansion and improvement within its operational strategy.

Key Growth Drivers

Product Innovations: Capstone has been actively pursuing innovations in microturbine technology, including advancements in hybrid systems. The introduction of the C1000 microturbine, boasting a capacity of 1 MW, allows for greater energy efficiency and reduced emissions. The global microturbine market is projected to reach $1.37 billion by 2025, indicating a substantial growth opportunity for the company.

Market Expansions: CGRN is focusing on expanding its market presence, specifically in underserved regions. For instance, the company has targeted opportunities in the Asia-Pacific region, where the demand for renewable energy solutions is increasing. The Asia-Pacific renewable energy market is expected to grow at a CAGR of 8.1% from 2020 to 2027.

Acquisitions: CGRN has been strategic in its acquisitions, aiming to bolster its technological capabilities and market reach. Notably, the acquisition of energy management companies allows CGRN to enhance its service offerings and expand its customer base. Such acquisitions can lead to projected revenue increases of up to 15% annually in the subsequent years.

Future Revenue Growth Projections

According to recent financial forecasts, CGRN's revenue is expected to grow from $29.5 million in 2022 to $45 million by 2025. This represents a compound annual growth rate (CAGR) of approximately 21%.

Earnings Estimates

The company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) is projected to improve significantly, moving from a negative $2 million in 2022 to a positive $5 million by 2025. This turnaround highlights the company’s operational improvements and increased market penetration.

Strategic Initiatives and Partnerships

CGRN has engaged in several strategic partnerships, particularly in the energy-as-a-service model, allowing for recurring revenue streams. Collaborations with companies like ENGIE enhance CGRN’s technological and distribution capabilities, likely increasing market share by 10% in the next few years.

Competitive Advantages

Capstone Green Energy’s competitive advantages include its patented microturbine technology, which offers superior efficiency and flexibility compared to traditional energy solutions. The company’s established brand reputation and strong customer relationships further position it favorably against competitors in the renewable energy sector.