Tomahawk, WI 8/15/2013 (Basicsmedia) – There are industries which will do relatively well even when the economy is in a bad shape. But there are certain industries which can only do well when the economy is performing very well. The industrial electrical equipment industry, to which Capstone Turbine Corporation (NASDAQ:CPST) is one of the players, is one such industry. Therefore, in order to publish financial results which are pleasing to investors, these types of companies must look for a way to operate outside their traditionally strong markets in both North America and Europe and look for new customers in emerging economies.

The reason why companies in this industry must look for new customers elsewhere in the emerging markets, is because there is a lot to be gained through such a move. Not only is the cost of labor low in such markets, but the company receives a major impetus for growth and increased production as well as huge tracts of land which they can make use of to set up their own brick and mortar facilities. What is more, by taking such a route, the company will succeed in limiting the negative impact which is often associated with foreign currency exchange.

What Must CPST Do To Stay Afloat despite the Hard Times?

Capstone Turbine is a company which has to actively pursue the steps indicated above to remain afloat, and reward its investors handsomely. Its shares have reported a drop of around 13% and this does not augur well for investors. The company reported loss in revenue by about 15%, to settle at $24.4 million. The company went further to report loss to the tune of $6 million, which was quite worse compared to what had been floating around in the form of estimates which were originally made by both industry and Wall Street analysts.

The future is not as bright as may have been envisaged by shareholders. Thus far, the company seems to be in a limbo, lacking ideas on the way forward, or what it needs to do in order to turn from losses and into profits. By the end of 2012, there was a lot of optimism on the part of investors and the industry as a whole to the effect that the company would report profits in 2013, but this hope seems to have gone out of the window. Capstone needs to see a significant rise in revenue if it is to be on its way towards profit making.

Capstone Turbine also needs to see a tremendous growth and increase in the number of orders it receives. Currently, it only has around $27.1 million worth of orders to service, and this number is just too small and insignificant to help push the company towards the path which will lead it towards profitability once again. As long as there is enough growth, both in the industry and inside the company as well, you can expect Capstone to have taken the first step towards profitability. Based on the figures which I’ve seen, I don’t think this is possible.

A few of the top companies in this industry which Capstone must work hard to surpass in terms of financial results or even market cap include Emerson Electric Co. (NYSE:EMR) and Eaton Corporation Plc (NYSE:ETN).

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