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Solazyme Earnings: An Early Look

Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors, and Solazyme (NASDAQ: TVIA  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Alternative fuels have been all the rage in recent years, and Solazyme seeks to produce sustainable biofuel and premium oils with its innovative algae-based technology. But some question whether the company can live up to the hype. Let's take an early look at what's been happening with Solazyme over the past quarter and what we're likely to see in its quarterly report on Wednesday.

Stats on Solazyme

Analyst EPS Estimate


Year-Ago EPS


Revenue Estimate

$9.28 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Solazyme get more energetic this quarter?
Analysts haven't changed their views on Solazyme much in the past three months, keeping current-quarter estimates steady. Yet even with losses as far out as analysts care to project, the stock has performed well recently, climbing almost 14% since mid-November.

The big news for Solazyme this quarter came back in November, when the company announced two major partnerships. On the alternative-energy front, Solazyme signed a joint venture agreement with Bunge (NYSE: BG  ) , Solazyme could boost annual production to between 300,000 and 400,000 metric tons by 2016. Morever, Archer Daniels Midland (NYSE: ADM  ) signed up to collaborate with Solazyme on producing algal oils for the consumer market.

But at this point, it's far too early to be confident in Solazyme's long-term prospects. With minuscule sales, Solazyme is counting on a fast ramp-up in growth to justify its share price, but capacity expansion won't come online for several years. In that time, changing market conditions could sap much of the potential from the industry. Moreover, if competitor Amyris (NASDAQ: AMRS  ) finds success from its sugar-based jet fuel, or if Rentech (NASDAQ: RTK  ) succeeds with its biomass projects, Solazyme could find its algae-based model falling out of favor.

In its report, Solazyme needs to establish not just promising prospects but a firm path to growth. As long as it can't put bottom-line profits where its mouth is, Solazyme will probably continue to struggle.

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Read/Post Comments (6) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 18, 2013, at 9:07 PM, BillStacker wrote:

    So I totally missed the part where you venture a guess as to whether SZYM will beat or miss this quarter.

    "Nothing ventured, nothing gained" is true in stock picking as well as writing.

  • Report this Comment On February 19, 2013, at 12:25 PM, peteyguy wrote:

    I'm amazed some analysts insist on contributing articles about Solazyme, when they simply don't yet understand the nature of this company's real strengths and promise.

    It doesn't take much effort to find information about just how many industries Solazyme can affect, and the list is long... but after 30 years working for Whole Foods Market, I can say with certainty Solazyme will undoubtedly have a HUGE impact in the bodycare products industry... and the skin care product industry is massive, worldwide.

    The fact that they can tailor oils for skin care products, offering an alternative to petroleum and animal based ingredients, may completely transform the industry, and everyone will climb on board using ingredients for which Solazyme holds the patents.

    To insist that Solazyme is primarily an energy sector play misses the potential of this company entirely!

    BTW, Dan... I like your BIO and I'm sure we'd enjoy a beer together, but you're dead wrong about the potential of this company.

    In two to three years, Solazyme will have made a lot of people some tidy fortunes, as earnings and this company's stock value are destined to impress!

  • Report this Comment On February 19, 2013, at 12:34 PM, TMFBlacknGold wrote:


    Actually, if you add up the company's total non-binding off-take agreements you'll see that close to 60% of the company's planned capacity is low-margin jet fuels. Include Dow for dielectric fluid and you get close to 520,000 metric tons of low-margin oils.

    That *could* make it tough to accumulate profits, but it will be a necessary part of getting one foot in the door.

    Of course, these totals are from non-binding agreements and yes, the company is loaded with potential. But there is truth to putting Solazyme primarily into the energy mix for now.


  • Report this Comment On February 19, 2013, at 12:57 PM, peteyguy wrote:

    Good point, but I'm looking long-term, 2-3 years... and I mainly take issue with the point Dan made that other biofuel companies could make Solazyme irrelevant in the future.

  • Report this Comment On February 19, 2013, at 1:02 PM, TMFBlacknGold wrote:


    True, the space is big enough to absorb everyone. I have a series of articles on Solazyme coming out in the next several weeks that you will enjoy. Here's the first:


  • Report this Comment On February 19, 2013, at 1:04 PM, peteyguy wrote:

    Thanks Maxxwell,

    I look forward to reading them!

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