Green Plains Renewable Energy (GPRE) Reports Mixed Results; Expects To Remain Profitable

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06:11:03 pm on July 28, 2010

Green Plains Renewable (GPRE) reported mixed results after the bell today, but it still represented another quarter of big quarter over quarter growth.  The company missed the EPS analyst estimate of .36, posting .27, but came in ahead of analyst estimates on the revenue side, posting $453 million vs the estimate of $426 million.  If my math is correct that’s an 800% increase in earnings over the year ago quarter and a 60% surge in revenues. 

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CEO Todd Becker commented: “We produced solid results in the second quarter because of our focus on managing margins and maintaining a low cost operating platform.  Ethanol production increased again this quarter to over 129 million gallons as a result of our incremental investment in process enhancements. We believe our six plants are now capable of sustained production of over 500 million gallons per year, which has driven our operating cost per gallon lower. We are continually looking for ways to become more efficient and more effective throughout our operations.”

Look ahead, Mr. Becker acknowledged that while ethanol margins have weakened, they expect to remain profitable and margins to pick up again with expanded mandates for renewable fuels and ethanol blending likely for next year.  Of course a favorable ruling from the EPA on E15, allowing higher ethanol blend rates would be beneficial for GPRE and all ethanol companies. 

I’m not a fan of ethanol and most of the stocks are still undergoing steep corrections, but it’s clear GPRE is separating itself from the pack as a top ethanol producer.  Should these stocks get going again, this is the one to put at the top of the watch list. 

Shares of GPRE are trading fractionally higher after hours and are still in basing mode.

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