Renewable Energy Group Inc (REGI) has reported preliminary results for the first quarter of its 2014 fiscal year (1QFY14; ended March 31, 2014) yesterday. Renewable Energy produces and sells biodiesel in North America. It converts natural fats, oils and greases into advanced biofuels.
The Ames, Iowa-based company lowered its earnings expectations for the first quarter yesterday, claiming that its performance was negatively impacted by a decline in biodiesel prices and higher feedstock costs. In the first quarter, the company expects to have sold “at the lower end” of its guided range of 45-55 million gallons. During 1QFY13, the company had reported revenues of $339.3 million, selling 38.9 million gallons of biodiesel.
The biofuel seller also said it expects adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to be in the range of $1-3 million – a significant revision from its previous guidance, which had put 1QFY14 EBITDA in the range of $5-15 million. Analysts’ mean estimate for adjusted EBITDA before yesterday’s revision was $13.1 million.
The bleaker outlook provided by the company pushed its stock price down 15.7% ($1.97) to $10.61 in after-hours trading. Currently, the stock is trading at a one-year forward price-to-earnings (P/E) multiple of 11.98x, which translates into a premium of 55.6% to its one-year average P/E multiple of 7.7x.
Out of six analysts who cover the stock, four give Renewable Energy Group a Buy rating, while the other two recommend it as a Hold. The average target price given by these analysts is $14.63, which translates into an upside of 16.3% at yesterday’s closing price.
The biodiesel producer announced it will discuss its strategic direction and the recent initiatives it has taken at an analyst meeting in Washington on April 22. The company plans to formally release its earnings for the quarter on May 6.