GPRE

Green Plains Inc

Energy


Presented:11/07/2018
Price:$17.66
Cap:$0.73B
Current Price:$11.70
Cap:$0.76B

Presented

Date11/07/2018
Price$17.66
Market Cap$0.73B
Ent Value$1.96B
P/E Ratio294.33x
Book Value$22.24
Div Yield2.72%
Shares O/S41.43M
Ave Daily Vol700,147
Short IntN/A

Current

Price$11.70
Market Cap$0.76B
Green Plains, Inc. produces fuel-grade ethanol and corn oil, provides grain handling & storage, commodity marketing and distribution services. The company operates through the following segments: Ethanol Production, Partnership, Agribusiness and Energy Services and Food & Ingredients. The Ethanol Production segment provides ethanol plants in Indiana, Iowa, Michigan, Minnesota, Nebraska and Tennessee. The Partnership segment offers fuel storage and transportation services by owning, operating, developing and acquiring ethanol and fuel storage tanks, terminals, transportation assets and other related assets and businesses. The Agribusiness and Energy Services segment includes grain procurement, which markets, sells and distributes ethanol, distillers grains and corn oil produced at ethanol plants. The Food & Ingredients segment involves cattle feeding operations. Green Plains was founded in June 2004 and is headquartered in Omaha, NE.

Publicly traded companies mentioned herein: Archer Daniels Midland Co (ADM), Green Plains Inc (GPRE), Green Plains Partners LP (GPP), Pacific Ethanol Inc (PEIX), Valero Energy Corporation (VLO)

Highlights

The presenter is bearish on the ethanol space and sees shares of Green Plains (GPRE) as overvalued at the $17 - $18 level (please note, the company reported earnings after the close on 11/7/18). Going top-down, the Environmental Protection Agency (EPA) regulates the industry, and per the Renewable Fuel Standard (RFS) Program most of the gasoline sold in the US is a 10% ethanol blend (E10). This program’s volumetric requirements are set through 2022; however, the Trump administration is looking to promote E15 (15% ethanol) year-round to boost demand for an ailing industry. According to the presenter, the “real problems” are an oversupply of ethanol relative to demand, the properties of ethanol, and a collapse in the price of renewable fuel identification numbers (RINs) that makes blending E15 “uninteresting” at the retail level. He intends to remain short GPRE through this cycle and believes the company could fall into a state of distress.

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Idea Discussion

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