Clean Energy Fuels (CLNE)

Alternative fuel provider Clean Energy Fuels (NASDAQ:CLNE) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 2.7% year on year to $112.3 million. Its non-GAAP loss of $0 per share was significantly above analysts’ consensus estimates.

Company Overview

Operating the largest network of natural gas fueling stations in North America with over 600 locations, Clean Energy Fuels (NASDAQ:CLNE) supplies renewable natural gas and conventional natural gas as fuel for commercial vehicle fleets.

This category includes smaller or niche E&P companies operating in specialized basins, geographies, or resource types outside major classifications. These firms may target unconventional resources, frontier regions, or specific commodity niches. Tailwinds include potential for outsized returns from successful exploration, acquisition opportunities during industry downturns, and specialized expertise commanding premium valuations. Headwinds include higher operational and geological risks, limited scale reducing negotiating power and cost efficiencies, and constrained capital market access during challenging commodity environments. Regulatory risks and ESG concerns may disproportionately affect smaller operators with fewer resources for compliance.

Clean Energy Fuels competes with traditional diesel fuel suppliers, electric vehicle charging providers, and other alternative fuel companies. In the natural gas vehicle fuel space, competitors include utilities and regional natural gas distributors.

The size of the revenue base is a way to assess topline, and it tells an investor whether an Energy producer has crossed the line between being a more vulnerable commodity taker and a durable operating platform. Scaled businesses tend to produce and generate revenue from many wells, pads, takeaway routes, and geographies, not just a single field or drilling program. Clean Energy Fuels’s $424.8 million of revenue in the last year is pretty small for the industry, suggesting the company hasn’t hit a level of diversification where investors can sleep easy at night.

Cyclical industries such as Energy can make mediocre companies look great for a time, but a long-term view reveals which businesses can actually withstand and adapt to changing conditions. Unfortunately, Clean Energy Fuels’s 7.8% annualized revenue growth over the last five years was tepid. This was below our standard for the energy upstream and integrated energy sector and is a tough starting point for our analysis.

Within Energy, a singular timeframe, even if it’s quite long-term, only sheds light on how well a company rode the last commodity cycle. To better assess whether a company compounds through cycles, we validate our view with an even longer, ten-year view. Clean Energy Fuels’s annualized revenue growth of 1% over the last ten years is below its five-year trend, but we still think the results were respectable.

This quarter, Clean Energy Fuels reported modest year-on-year revenue growth of 2.7% but beat Wall Street’s estimates by 14.3%.

In any given year, energy gross margins are heavily influenced by prices, hedging, and cost inflation, but over a full cycle these gross margins reveal which producers are structurally advantaged through superior “rock” quality, infrastructure access, and cost position.

Clean Energy Fuels, which averaged 24.6% gross margin over the last five years, exhibiting bottom-tier unit economics in the sector. It means the company will struggle at higher commodity prices than peers with better gross margins.

In Q4, Clean Energy Fuels produced a 28.2% gross profit margin, down 3.4 percentage points year on year.

Adjusted EBITDA margin is an important measure of profitability for the sector and accounts for the gross margins and operating costs mentioned previously. Unlike operating margin, it is not distorted by accounting conventions around reserves, drilling costs, and assumptions on commodity consumption from the well or basin. Adjusted EBITDA highlights the economic reality of how much cash the rock produces before the capital structure (debt service) and the drilling budget (capex) are considered.

Clean Energy Fuels was profitable over the last five years but held back by its large cost base. Its average EBITDA margin of 15.2% was among the worst in the energy upstream and integrated energy sector.

Analyzing the trend in its profitability, Clean Energy Fuels’s EBITDA margin decreased by 6.4 percentage points over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Clean Energy Fuels’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q4, Clean Energy Fuels generated an EBITDA margin profit margin of 14%, down 7.6 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue. This adjusted EBITDA beat Wall Street’s estimates by 8.1%.

Adjusted EBITDA shows how profitable a company’s existing wells are before financing and reinvestment decisions, but free cash flow shows how much value remains after paying the cost of replacing those wells. In upstream energy, production naturally declines over time, so companies must continuously reinvest just to stand still. A producer can report strong EBITDA margins yet generate little or no free cash flow if its wells decline quickly or if new drilling is expensive. Free cash flow therefore captures not only how efficiently a company produces hydrocarbons today, but also how costly it is to sustain that production into the future.

Clean Energy Fuels has shown weak cash profitability relative to peers over the last five years, giving the company fewer opportunities to return capital to shareholders. Its free cash flow margin averaged 2.2%, below what we’d expect for an upstream and integrated energy business.

The level of free cash flow is important, but its durability across cycles is just as critical. Consistent margins are far more valuable than volatile swings driven by commodity prices.

Clean Energy Fuels’s ratio of quarterly free cash flow volatility to WTI crude price volatility over the past five years was 44.5 (lower is better), indicating that its cash generation is far more sensitive to commodity-price swings than most peers. This elevated volatility limits its access to capital in downturns and makes it unlikely to act as a consolidator when weaker competitors come under pressure.

You may be asking why we wait until the free cash flow line to perform this stability analysis versus commodity prices. Why not compare revenue or EBITDA to WTI in the case of Clean Energy Fuels? Because what ultimately matters is not how much revenue or profit you earn when prices are high but how much cash you can generate when prices are low. Free cash flow is the superior metric because it includes everything from hedging prowess to growth and maintenance capex to management behavior during good times and bad.

Clean Energy Fuels’s free cash flow clocked in at $6.5 million in Q4, equivalent to a 5.8% margin. The company’s cash profitability regressed as it was 3.7 percentage points lower than in the same quarter last year, but it’s still above its five-year average. We wouldn’t read too much into this quarter’s decline because investment needs can be seasonal, leading to short-term swings. Long-term trends are more important.

Free cash flow tells investors how much money an Energy producer made, and ROIC takes this one step further by telling investors how well and effectively the business made it. ROIC illustrates how much operating profit a producer generated relative to the money it has raised (debt and equity).

We at StockStory like to look at ROIC over a ten-year period because energy investment cycles can involve up to five years of ramping production and another five years of harvesting. A decade view captures buying, extracting, and monetizing rather than just part of that picture. Clean Energy Fuels’s ten-year average ROIC was negative 8.2%, meaning management lost money while trying to expand the business. Its returns were among the worst in the energy upstream and integrated energy sector.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Clean Energy Fuels’s ROIC averaged 1 percentage point decreases each year. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

Clean Energy Fuels reported $157.8 million of cash and $226.8 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $67.61 million of EBITDA over the last 12 months, we view Clean Energy Fuels’s 1.0× net-debt-to-EBITDA ratio as safe. We also see its $41.3 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see Clean Energy Fuels beat analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a good print with some key areas of upside. The stock remained flat at $2.34 immediately following the results.

Updated: March 13, 2026 at 1:07 AM EDT

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

We see the value of companies helping consumers, but in the case of Clean Energy Fuels, we’re out. To begin with, its revenue growth was quite poor over the last five years, and analysts expect its demand to deteriorate over the next 12 months. On top of that, Clean Energy Fuels’s relatively low ROIC suggests management has struggled to find compelling investment opportunities, and its free cash flow volatility compared to commodity price volatility is bottom-tier in the sector, leading to highly volatile free cash flow.

Clean Energy Fuels’s EV-to-EBITDA ratio based on the next 12 months is 7.5x. This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $4.75 on the company (compared to the current share price of $2.20).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.