On Wednesday, BMO Capital adjusted its outlook for Green Plains (NASDAQ:GPRE) Renewable Energy (NASDAQ:GPRE) shares, reducing the stock's price target from $22.00 to $17.00. The firm has maintained a Market Perform rating for the company. This change comes after Green Plains reported a second quarter EBITDA of $5 million, which did not meet the consensus estimate of $14 million. The shortfall was primarily due to lower ethanol margins.
Green Plains has, however, provided a more positive forecast for the third quarter of 2024. The company has secured ethanol margin hedges at approximately $0.30 per gallon for July, which is higher than the current spot levels. Despite this optimistic view for the upcoming quarter, the outlook for the fourth quarter remains cautious due to the ongoing high corn basis, which is expected to correct following the harvest season.
The company's Hi-Pro segment continues to contribute modestly, and there have been delays in increasing production due to bottlenecks affecting the Clean Sugar project. Nevertheless, Green Plains has confirmed that its carbon capture project in Nebraska is progressing as planned, with an anticipated start date in the second half of 2025.
In light of these developments, BMO Capital has revised its estimates for Green Plains. The firm's analyst cited the lower-than-expected EBITDA, the optimistic third-quarter hedges, the challenges faced in the fourth quarter, and the current progress of the company's projects as the basis for the updated price target.
In other recent news, Green Plains Inc. has been downgraded by Oppenheimer from Outperform to Perform, citing concerns over the company's earnings visibility. Despite this, the firm acknowledges the potential of Green Plains' 2.0 platform and maintains that the fundamental reasons behind its initial bullish stance remain unchanged.
Key factors that could influence the company's performance include an expected announcement of Carbon Capture and Storage (CCS) well approval, improved ethanol crush margins, and the possibility of an acquisition offer.
Despite a decrease in consolidated revenues to $618.8 million, Green Plains reported a promising outlook for the remainder of 2024. This optimism is driven by record-breaking exports and improved margins due to lower input costs. Green Plains is also progressing in its transformation into a low-carbon bio-refinery platform, with ongoing equipment refreshes and plant expansions to boost capacity.
The company recorded a net loss of $24.35 million for the quarter and capital expenditures of $18 million were allocated across the platform, resulting in a decrease in liquidity by $52 million. Despite these challenges, Green Plains achieved a quarterly record in renewable corn oil yields and is focusing on resolving construction quality issues at the Shenandoah facility. These are the recent developments in the company's operations and strategy.
InvestingPro Insights
As Green Plains Renewable Energy (NASDAQ:GPRE) navigates through a challenging period, recent metrics and analyst insights from InvestingPro provide a deeper understanding of the company's financial health and market position.
Despite a price target reduction from BMO Capital, InvestingPro Tips indicate that analysts have revised their earnings upwards for the upcoming period, suggesting a potential recovery on the horizon. However, it's worth noting that Green Plains has been grappling with weak gross profit margins and analysts do not anticipate the company will be profitable this year.
InvestingPro Data reveals that Green Plains has a market capitalization of approximately $957.65 million, with a negative Price to Earnings (P/E) ratio reflecting the company's current lack of profitability. The company's revenue over the last twelve months was reported at $2.821 billion, although it has experienced a decline of 20.74% during the same period. The pressure on the stock is evident, with a significant price drop of over 56% in the past year.
While the company does not pay a dividend, which may be a consideration for income-focused investors, it's also worth mentioning that Green Plains' liquid assets exceed its short-term obligations, providing some financial flexibility. For those interested in a more detailed analysis, InvestingPro offers additional tips on the company's financial health and stock performance (https://www.investing.com/pro/GPRE).
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
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