What happened 

Shares of biofuel company Renewable Energy Group Inc. (NASDAQ:REGI) jumped 17.4% in March, according to data provided by S&P Global Market Intelligence, after reporting more financial progress to end 2016 than investors expected. 

So what 

Gallons sold jumped 58% from a year ago to 155.9 million, and average selling price increased 13% to $3.05. That helped drive revenue 45% higher to $560.4 million; the company swung from a net loss to a profit of $20.2 million.

Corn sitting next to vials of different biofuels

Image source: Getty Images.

The bumps in sales and earnings were driven by an expiring tax incentive that isn't expected to be renewed. Tax and regulatory incentives for biofuels have long driven demand, but Renewable Energy Group has to take advantage of them when they are available.

Now what

Despite the regulatory challenges, analysts are expecting earnings to remain fairly strong for Renewable Energy Group. After adjusted earnings of $1.50 per share in 2016, expectations are for $1.18 per share in earnings this year. That may be tough with less regulatory help. But right now investors are seeing upside in the biofuel business, and if management can control costs and keep volume flowing through the system investors have reason to believe the wheel can keep on spinning.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.