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Despite Oil's Slide, This Alternative Energy Stock Has Soared - Stocks in the News

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Alternative energy has certainly become a more popular investment over the past few years as many are looking to move beyond oil to other types of fuel sources. And though many zero in on solar and wind power, plant-based power, with ethanol, is also a relatively green fuel source that can play an important part in our energy mix.

One company in this space that has been a strong performer as of late, even with oil's slide, is Green Plains. This company has crushed the market as of late and it could be a solid pick for investors who want to get into this corner of the energy market right now.

Green Plains in Focus

Green Plains Inc. ( GPRE ) is vertically integrated producer, marketer and distributer of ethanol. The company operates through four segments: Ethanol Production, Corn Oil Production, Agribusiness, and Marketing and Distribution. It produces ethanol and co-products, such as wet, modified wet or dried distillers grains, as well as extracts non-edible corn oil.

The company is also involved in buying and selling bulk grain primarily corn and soybeans. Green Plains Inc., formerly known as Green Plains Renewable Energy, Inc., is headquartered in Omaha, Nebraska.

Green Plains Inc. has gained about 27% since October 14 th and shows strong stability at it gained 3.03% in intraday trading on Wednesday. Investors are currently concerned with WTI crude oil prices which hit $77 a barrel and are looking for an alternative energy stock that hasn't been hit by these trends. This ethanol stock performed extremely well YTD increasing by 80% even after having a big down swing in the month of September.

Beyond the momentum, Green Plains offers attractive fundamentals that should raise some eyebrows. The stock has a current P/E (f1) of 8.61 while maintaining a PEG ratio of .94 indicating strong potential for growth in earnings at a reasonable price. The price of the stock is very attractive at a P/B ratio of 1.63 which is a reasonable ratio given that the stock has done extremely well this year.

Financial Statistics

Market Cap $1.30B Profit Margin(ttm) 4.58%
Enterprise $1.49B Operating Margin(ttm) 8.47%
Forward PE(f1) 8.61 ROA(ttm) 10.70%
PEG 0.94 ROE(ttm) 22.04%

As you can see from the above statistics and price and consensus chart, GPRE offers attractive financials for an affordable price. The company has about $180 million in debt while being able to cover it with their available cash of $401.11 million. The company seems to be in a good position after reporting quarterly earnings growth YoY of 343.70%.

The company has continually grown their revenue each year since 07's annual revenue of $24 million to TTM revenue of $3.1 billion. This company could be considered a growth company and has increased EPS on average since 05' EPS report of -42 cents per share to the current TTM EPS report of $3.44 per share. They offer a current dividend yield of .90% (32 cents per share) and have just recently started issuing dividends, indicating positive news for future investors.

Third Quarter Results

Green Plains Inc. announced today its financial results for the third quarter of 2014. Net income for the quarter was $41.7 million, or $1.03 per diluted share, compared to net income of $9.4 million, or $0.28 per diluted share, for the same period in 2013. Revenues were $833.9 million for the third quarter of 2014 compared to $758.0 million for the same period in 2013.

"The strength in our businesses continues as Green Plains has generated over $320 million of EBITDA over the last four quarters," said Todd Becker, President and Chief Executive Officer. "We continue to execute our business strategy, take advantage of the current ethanol industry environment and look for opportunities to further our growth."

· Announced share buyback of up to $100 million of common stock

· Paid quarterly dividend of 8 cents per share, a 100% increase from previously cash dividend. YTD basis has paid $5.9 million in dividends to shareholders.

Alternative investment

As oil prices continue to drop and Crude Oil (WTI) hitting $77.88 a barrel, investors are looking for investments in the energy world that haven't been crashing. Some analysts predict the drop in oil prices will continue for the foreseeable future as long as Saudi Arabia will be able to handle the downward pressure on their margins.

Saudi Arabia's cost per barrel threshold is far lower than other oil producing companies such as Russia and the US so investors should be considering other options. Ethanol is a sustainable alternative that does offer some safety in drop of oil prices, so investors should be keen to look into more alternative energy companies, and especially if the trend is favorable in corn prices.

Bottom Line

We currently rank GPRE as a Zacks Rank #1(strong buy) and note that the company has beat earnings estimates by an average of 25.09% since last December. 100% of analysts have upgraded their earnings estimates for the current quarter up until next year, and the current quarter consensus estimate has increased 70% in YoY growth estimation.

Again, with attractive PE and PEG ratios of 9.20 and .94 compared to the industries' 22.80 and 1.97, this ethanol distributer is a company that investors should be thinking of buying into, and especially if they are looking for an alternative play on the important energy industry.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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