EnerNOC’s Mixed Bag of Earnings Numbers

EnerNOC delivered first-quarter earnings Wednesday that were a mixed bag. The company beat Wall Street estimates, which is always nice; but its operating loss nearly tripled from the previous year to $11.7 million, which is not so nice. The net loss of 57 cents a share is down from 91 cents a year earlier, which sounds good. But it fell only because the number of shares used to calculate EPS (19 million shares vs. 4 million a year ago) grew faster than that loss.

Investors watching EnerNOC for a while know that there’s a reason for the losses. The company is spending heavily, especially on new employees, to gain a bigger foothold in a growing market opportunity. So while first-quarter revenue grew an impressive 87 percent on year, general and administrative costs (which include network operations workers) grew by 212 percent and R&D costs expanded by 343 percent.

EnerNOC’s business is helping utilities, grid operators and other companies like manufacturers use their existing energy more efficiently. With energy prices rising and blackouts likely to become more common, many companies are realizing energy efficiency is not only smart, but necessary.

But weighing opportunity against the near-term losses that result from aggressive expansion has left the stock volatile. Before its earnings report Wednesday, the stock was down 72 percent so far in 2008, leaving it trading at a cheap-looking 2.5 times its estimated sales for this year.

So after falling 5 percent to $13.69 in active trading Wednesday on what appeared to be low expectations from its earnings report, the stock surged as much as 19 percent to $16.24 in after hours trading on the actual numbers.

That’s still a far cry from the $50 price EnerNOC saw late last year. The company’s promise remains bright,  and it expects to be profitable by 2010. But for now the sooner it can grow its revenue faster than its spending, the better investors will feel.