(GTLS) is a $2.5 billion global engineering company that
specializes in equipment primarily used in energy processing
applications such as liquefied natural gas (LNG) and in the
purification and storage of industrial gases for medical fields.
After the company's 3rd-quarter earnings report on October 31, I
first wrote about it for the Bear of the Day. That report included
a miss and guide lower, leaving investors and the stock completely
out of fuel as shares dropped over 27% in the last three weeks.
As the stock slipped back to a Zacks #5 Rank last week, I thought
it would be good to revisit the story and see where things might be
headed. The news is not getting any better since their most recent
report and analyst earnings estimates have taken another nose dive.
Chart Industries, which was seen on the forefront of systems
required to support trucks that run on LNG, operates in three
segments: Energy and Chemicals, Distribution and Storage, and
Biomedical. The latter segment wasn't the problem area last
The Chart for Chart
The stock and its Zacks Rank tell a story that any investor caught
with a "miss and lower" quarter -- as opposed to "beat and raise"
-- can relate to.
The LNG Frontier
In the past two years, I have invested in two other companies
involved in using LNG for truck fuel.
(WPRT) caught my eye in 2012 as a maker of engine conversion kits,
and not least because their "big brother" in the business was
While some companies like UPS and FedEx already run expanding
portions of their fleets with natural gas engines, the idea for all
of America's trucks to run on nat gas was popularized by infamous
energy tycoon T. Boone Pickens.
The billionaire oil man has spent several years lobbying Congress
to pass what is commonly known as the Natural Gas Act. His plan for
American energy independence and economic/environmental stability
was to have the government subsidize the conversion of 18-wheelers
from diesel to nat gas.
WPRT fortunes may have been tied to much to these big expectations
about government subsidies for truck engine conversions and the
stock has fallen to 3-year lows as those "nat gas dreams" have not
Clean Energy Fuels
(CLNE), one of the leading LNG gas station operators (in part
financed by Pickens) hasn't had a much better time of it, with the
stock dropping out of a long $12-14 range to levels not seen since
July of 2009. They remain unprofitable with EPS estimates still
(LNG) is the other nat gas stock I traded last year. They are the
only company approved by the Department of Energy to export LNG and
CNG (compressed natural gas) products. They are building the export
facilities in Louisiana and shares are up over 100% in the past
The Future for Chart
Given this mixed landscape for LNG-centered businesses, it is no
surprise what Global Hunter Securities had to say about Chart
Industries last fall..
"The market realized the issues that led to our downgrade several
months ago: that the LNG space is highly competitive, large
projects have a tendency to slip and costs are often
underestimated. We continue to believe that the macro story is very
strong and that GTLS will participate, but we feel that is
currently priced into the stock, thus we are not moving off of our
That was their view on November 4 when they lowered EPS estimates
for Q4 and the full year 2014. They also lowered their price target
on shares then to $107 from $115. On February 26, the firm lowered
earning estimates again and their price target to $80.
While GTLS may have superior technology that will be in high demand
when the trend of nat gas trucks accelerates, right now the
earnings revisions trends are saying to find another ride.
Kevin Cook is a Senior Stock Strategist for Zacks where he runs
Follow The Money
CLEAN EGY FUELS (CLNE): Free Stock Analysis
CUMMINS INC (CMI): Free Stock Analysis Report
CHART INDUSTRIE (GTLS): Free Stock Analysis
CHENIERE ENERGY (LNG): Free Stock Analysis
WESTPORT INNOV (WPRT): Free Stock Analysis
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