Pacific Ethanol, Inc. (NASD:PEIX) Beats Estimates but Market Sells

Pacific Ethanol, Inc. (NASD:PEIX)

Pacific Ethanol, Inc. (NASD:PEIX) gapped up on the open and gained 12% before pulling back into negative territory. Yesterday PEIX shares closed at $8.35 and this morning reached $9.35 based on a Q4 and 2016 full-year earnings report that beat analyst expectations. Trading has been around three times the average daily volume.

For Q4 2016, Pacific Ethanol, Inc. (NASD:PEIX) reported net income of $13.1 million – a YoY gain of 17%. Q4 2016 operating income was $18.8 million versus $0.5 million for the same period last year. Net income available to common stockholders was $12.6 million, or $0.30/share, compared to a net loss of $1.1 million, or $0.03/share in Q4 2015.

For the year 2016, net sales were $1,624.8 million, compared to $1,191.2 million in 2015. Gross profit was $51.8 million, compared to $7.4 million in 2015. Net income available to common stockholders was $0.1 million, or $0.00/share, compared to a 2015 net loss of $20.1 million, or $0.60/share.

Pacific Ethanol is a producer and marketer of low-carbon renewable fuels in the Western United States. Pacific Ethanol, Inc. (NASD:PEIX) owns eight ethanol production facilities, four in the Western states of California, Oregon, and Idaho, and four in the Midwestern states of Illinois and Nebraska. The plants have a combined production capacity of 515 million gallons per year, produce over 1 million tons per year of ethanol co-products such as wet and dry distiller grains, wet and dry corn gluten feed, condensed distillers solubles, corn gluten meal, corn germ, corn oil, distillers yeast, and CO2.

Ethanol could be considered an integral part of the country’s transportation fuel market, currently representing nearly 10% of the overall gasoline supply in the United States. Ethanol has many advantages as a component of our transportation fuels. It is made from domestically produced renewable resources and reduces air pollution and carbon dioxide. With its high octane rating, ethanol is claimed to add value to gasoline blends. Ethanol also helps consumers by increasing domestic fuel supplies and refining capacity.

Pacific Ethanol, Inc. (NASD:PEIX) sales have increased from $900 million in 2011 to $1.19 billion in 2015. EPS has been erratic. In 2011 PEIX shareholders experienced a positive EPS of $0.80 – and also in 2014 when the company posted a profit of $0.93 EPS. However there were EPS losses in 2012 (-$2.81), 2013 (-$0.17), and in 2015 (-$0.60). PEIX is currently trading down over 3% below yesterday’s close.

3/2/2017
Ticker Symbol PEIX
Last Price a/o 2:27 PM EST  $                      8.10
Average Volume                    568,000
Market Cap (mlns)  $                  358.13
Sales (mlns) $1,560.00
Shares Outstanding (mlns) 42.89
Share Float (mlns) 34.89
Shortable Yes
Optionable Yes
Inside Ownership 0.20%
Short Float 2.87%
Short Interest Ratio 1.77
Quarterly Return -1.18%
YTD Return -12.11%
Year Return 105.16%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy. 

About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading.