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Why Renewable Energy (REGI) Stock Is Down Today

Stocks in this article: REGI

NEW YORK (TheStreet) -- Renewable Energy (REGI) was falling 7.8% to $11.60 after lowering its expectations for the first quarter.

Renewable Energy announced is now expects a loss of between $1.5 million to $3.5 million for the quarter, while the Capital IQ Consensus Estimate calls for a gain of 14 cents a share. The company now expects an adjusted EBITDA of between $1 million to $3 million, while its previous guidance expected $5 million to $15 million.

The company cited the harsh, unseasonably cold winter, which reduced demand for diesel and biodiesel blends, and increased utility expenses as causes for the lower forecasts.

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TheStreet Ratings team rates RENEWABLE ENERGY GROUP INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate RENEWABLE ENERGY GROUP INC (REGI) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • REGI's very impressive revenue growth greatly exceeded the industry average of 7.7%. Since the same quarter one year prior, revenues leaped by 68.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • REGI's debt-to-equity ratio is very low at 0.08 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, REGI has a quick ratio of 2.43, which demonstrates the ability of the company to cover short-term liquidity needs.
  • RENEWABLE ENERGY GROUP INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, RENEWABLE ENERGY GROUP INC increased its bottom line by earning $5.22 versus $0.67 in the prior year. For the next year, the market is expecting a contraction of 82.4% in earnings ($0.92 versus $5.22).
  • The gross profit margin for RENEWABLE ENERGY GROUP INC is currently extremely low, coming in at 12.15%. Regardless of REGI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, REGI's net profit margin of 7.71% compares favorably to the industry average.
  • Net operating cash flow has decreased to $22.85 million or 17.18% when compared to the same quarter last year. Despite a decrease in cash flow of 17.18%, RENEWABLE ENERGY GROUP INC is in line with the industry average cash flow growth rate of -23.28%.
  • You can view the full analysis from the report here: REGI Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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