Please ensure Javascript is enabled for purposes of website accessibility

Why Renewable Energy Group Inc.'s Shares Jumped 29% in March

By Travis Hoium - Apr 7, 2016 at 9:15AM

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

Better-than-expected earnings got investors excited about biofuels last month.

Image source: Renewable Energy Group.

What: Shares of biofuels company Renewable Energy Group Inc. (REGI -0.07%) rose 29% in March after reporting better-than-expected earnings.

So what: Revenue rose 15% from a year ago to $387.8 million on the back of a 33% increase in volume. But the company reported a net loss of $95.6 million, or $2.18 per share. That figure included a $175.0 million non-cash charge related to goodwill, and if you pulled that out, it earned $1.81 per share. That's the figure that investors got excited about in the quarter.  

Now what: The bottom-line adjusted net income number may have beaten expectations, but the business is still struggling fundamentally. Adjusted EBITDA, which is a proxy for cash flow before financing costs, fell 37% from a year ago to $21.6 million and selling prices are dropping as well.

I think this looks like a short-term reprieve for Renewable Energy Group, and until we see selling prices rise and the company start reporting a profit, I'll stay out of this stock.

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.
$61.33 (-0.07%) $0.04

*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 service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/29/2022.

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.