CEPL

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Capstone Energy (CEPL) is a small, newly recapitalized power-equipment (turbines) company that has finally reached operating profitability (9 consecutive quarters of EBITDA growth and the last few have shown a small positive NI ~$2.8), with a potential data-center catalyst that is not yet reflected in the existing financials. Since the restructuring they went  from an operating-loss business to an operating-profit business while simultaneously growing revenue 24% and gross profit 45%. Total revenue of ~$106mm.  $20.4M of incremental revenue produced roughly $10.6M of incremental gross profit. That’s a ~52% incremental gross margin. And operating expenses barely moved: $28.9M → $30.5M . Not only are they selling their turbines but they also have a rental business that’s expanding.  $5.4M of future minimum rental revenue from owned/financed assets, plus another $2.4M from leased assets.   As for its turbines, it does have a slight edge/moat. First, its air bearing technology reduces maintenance AND noise — the latter arguably being more important given the noise concern w/ data centers. Second, the turbines produce 800vdc power, no need to convert, which means cheaper and easier install. This directly targets the latest generation of Nvdia GPU’s which require 800vdc. Third, the turbines can run on a number of fuel sources, not just Nat gas. Fourth, they’ve been in business for over 30 years, they have real knowledge and experience, and a diversified revenue stream — not just rentals but clientele. They provide on-sight power to oil and gas companies, BTM for hospitals and research centers, etc.  fifth, despite some misinformation out there, the turbines are very efficiency. They recycle the heat to power the cooling systems. They’re able to reach over 75% efficiency, all in.  At the last earnings call, they STRONGLY hinted that they are on the precipice of landing a DC deal. This is not  an  over hyped meme stock, or a pump and dump, like NUAI.  They are VERY careful with the language they use. Some quotes from The last call: “The types of deals now that we’re seeing, they’re moving into those phases that are more meaningful.” “When the customers start to do the real TCO models, we’re winning.” “It’s just a matter of time for us to march down the field and get some of these over the goal line.” And That “Some folks are just saying, ‘I don’t need a pilot, I just need megawatts.’” CEO mentioned that he is in talks with the “CTO of a major infrastructure player in the data center space.” Said mystery company is developing 1.5–3 MW sites, which is exactly who/what CEPL is targeting. And when asked whether this was an anchor customer, the CEO corrected the characterization “I don’t know if I would see that as an anchor customer as much as I would see it as an anchor partner.”

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CEPL earnings today after hours

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Just recently found this one while researching power companies. This might be the most exciting opportunity I have found in several years.  Hopefully OP still checks this. Started a position after seeing something very interesting in a public post from DataOne. Long story short Nebius is building a massive behind the meter data center/power plant in NJ.  DataOne publicly announced that they are working with several partners on the project, including E-finity (I researched each named party to see if there might be an investment thesis — what I found was pretty exciting). E-Finity acts as an exclusive authorized distributor and packager for Capstone Green Energy — my ears perk up. As OP noted, Capstones air bearing system has the added benefit of reducing noise. At a recent town meeting, the community was most concerned about noise. Capstone has a quieter solution — now I'm really intrigued. Then I see an article that Capstone just announced a hospital project that achieved 75% efficiency. While poking around on e-finity’s website I see under “portfolio” that they are working on an “undisclosed” (DataOne already spoiled that surprise with its announcement) project on the east coast. Per e-finity “The result is a 407 MW combined heat and power plant built around 36 medium-speed reciprocating engines at 11.3 MW . . . Total plant efficiency exceeds 70%”.   Taken all together, it sounds to me like Capstone may very well be supplying, at least in part, some of the power to Nebius’ NJ facility.   Now for the boring stuff. It trades at approximately 2.0-2.7x EV/Sales (current sales, meaning no data centers). By comparison, Bloom Energy trades at approximately 16.3. Conservatively, let’s bake-in a 100 MW data center contract into our assumptions (1/4 of the nebius project), CEPL’s implied EV/Sales falls to approximately 1x. That means this could hypothetically 10x if they really did land the nebius deal. Not to mention, CEPL returned to full-year profitability, reporting $2.8 million of net income versus a $7.2 million net loss the prior year; they’ve reported 8 consecutive quarters of positive Adjusted EBITDA; Gross profit increased 45% to $33.9 million; trailing-twelve-month revenue is $106.0 million, up 23.9% year-over-year from $85.6 million in the prior twelve months (fiscal year ended March 31, 2025); they appointed a new CEO and they are now officially listed on the nasdaq. Market cap sits around $277.33mm vs Bloom at $71.21bn.  I think it’s also worth mentioning that the extreme power density demands of NVIDIA's latest GPU architectures — Blackwell, Vera Rubin, Kyber and Rubin Ultra — require power delivery at densities that 415V AC infrastructure simply cannot support economically or physically. So there is a very real need to transition data center power architecture from traditional medium-voltage alternating current (specifically 415V AC) to 800 Volt Direct Current (800VDC). Capstone designed a turbine to meet this exact spec. I could go on and on, especially about the tech, but, from an investment standpoint, it shows they have a very real and very unique “moat”.  This is a real company. With real cash flow. Real net income. With real and diversified clients. With real, superior tech. With a real CEO. And they are about to enter the hottest sector today — AI behind the meter power. NO ONE has eyes on them (yet). Somehow this slipped under the radar. But, if they really did land that Nebius contract, once the news breaks, this will run.

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CGEH is now CEPL though