Ethanol Stocks Rise on Increased Sales

Joel Anderson |

Positive earnings reports and boosts in ethanol sales drove up the price on several different companies that manufacture biofuels on Thursday.  Market trends appeared positive in quarterly reports issued by both Green Plains Renewable Energy, Inc. (GPRE) and Pacific Ethanol, Inc. (PEIX), helping ethanol makers contribute to an otherwise bullish day.

Green Plains Beats Estimates

Green Plains released their Q3 report on Wednesday reporting $12.4 million in income, good for an EPS of $0.32, compared to $7.4 million or $0.23 a share the year prior in 2010.  Revenues for the quarter were $957 million, up from the $496 million in last year's third quarter.  On the whole, this beat the Reuters consensus estimate of $0.29 a share and helped the stock jump 6.49 percent Thursday.  At $11.00 a share, Green Plains is approaching its 52-week high of $13.61 it reached last April, and prospects look good for the company moving forward.  Green Plains reported strong growth based on an increase in ethanol sales as well as improved diversification in the company's revenue sources.  President and CEO Todd Becker reported that his company received over 40 percent of its revenue from non-ethanol sources, showing an ability to expand into new markets.  But Green Plains also saw great success through selling ethanol in the third quarter.  "Our ethanol production margins were more robust than expected, due in large part to our strategy to secure physical corn supply to each of our plants while waiting to opportunistically lock margins. This approach, along with our continued focus on efficient plant operations, generated our highest level of quarterly operating income for the ethanol production segment this year," commented Becker.

Rising Tide Raises All Ships

The core economic realities of ethanol production tend to be the same, meaning that good news from Green Plains and the small-cap Pacific Ethanol in their quarterly earnings pushed up stocks of ethanol makers across the board.  Rex American Resources Corp. (REX), a holding company with investments in five ethanol entities, rose 4.32 percent on the day, Bunge Limited (BG), an agribusiness and food company working in ethanol, jumped 5.57 percent, and Cosan Limited (CZZ), who is engaged in making ethanol from sugar, registered a 3.92 percent gain.  Other makers of biofuels and renewable resources had good days as well.  Gevo, Inc. (GEVO), a company focused on petroleum alternatives using isobutanol derived from renewable feedstocks, jumped 12.8 percent, and KiOR, Inc. (KIOR), a renewable energy company that has developed technology to convert nonfood biomass into hydrocarbon-based oil, moved up 10.83 percent in its stock value.

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Companies

Symbol Name Price Change % Volume
BG Bunge Limited 60.11 -1.26 -2.05 1,033,544
CZZ Cosan Limited Class A 6.89 -0.04 -0.58 4,753,394
GEVO Gevo Inc. 0.48 -0.01 -1.10 7,809,505
GPRE Green Plains Inc. 25.03 -0.17 -0.67 785,328
PEIX Pacific Ethanol Inc. 6.56 -0.07 -1.06 230,663
REX REX American Resources Corporation 82.88 -1.65 -1.95 89,773
SPLYD SPLYD n/a n/a n/a 0

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