Please ensure Javascript is enabled for purposes of website accessibility

Why Renewable Energy Group Inc.'s Shares Jumped 17% in March

By Travis Hoium - Updated Apr 7, 2017 at 7:11AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A strong profit in 2016 helped Renewable Energy Group, but it's possible the good times won't last.

What happened 

Shares of biofuel company Renewable Energy Group Inc. (REGI 0.08%) 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Renewable Energy Group, Inc. Stock Quote
Renewable Energy Group, Inc.
REGI
$61.50 (0.08%) $0.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.