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Why Shares of Renewable Energy Group Popped 15.4% on Tuesday

By Travis Hoium - May 4, 2021 at 3:43PM

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A big earnings beat pleased the market today.

What happened 

Shares of biofuel energy stock Renewable Energy Group (REGI) jumped as much as 15.4% on Tuesday after it reported first-quarter 2021 financial results. Shares were still up 12% at 3:15 p.m. EDT. 

So what

Quarterly revenue was up 14.1% to $539.7 million, slightly topping analyst estimates. Net income was $38.6 million, down 47.3% from a year ago, or $0.88 per share, versus the $0.16 analysts were expecting. 

Tanker on a highway.

Image source: Getty Images.

Rising raw material costs certainly put pressure on the bottom line but not as much as analysts were expecting. And management indicated that demand continues to grow as customers look for lower carbon fuels for their energy mix. 

Now what

Results can be volatile in the biofuels industry and feedstock costs will be worth watching over the next few quarters. Management has already said that rising costs are eating into margin and that will likely continue throughout 2021. Demand may offset some of this pressure and there could be some ability to raise prices if competing fuels rise, but those are largely out of management's control. For now, the market is happy with the surprisingly strong profit and that was enough to send shares higher.  

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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