NEW YORK (TheStreet) -- Gevo, Inc. (GEVO - Get Report) stock is tracing lower on Wednesday after making big gains on Tuesday. The renewable biofuel developer soared earlier in the week after announcing Lufthansa will evaluate the company's renewable jet fuel with the aim to approve its alcohol-to-jet fuel (ATJ) formula for commercial aviation use. Lufthansa will test the fuel with the support of the European Commission.
By midafternoon, shares of the nano-cap had tumbled -8.5% to $1.08. Trading volume of 3.5 million was more than double its three-month daily average of 1.4 million.
Since the announcement, shares are up 23.9%.
Separately, TheStreet Ratings team rates GEVO INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate GEVO INC (GEVO) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, generally disappointing historical performance in the stock itself and deteriorating net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, GEVO INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Looking at the price performance of GEVO's shares over the past 12 months, there is not much good news to report: the stock is down 56.25%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has significantly decreased by 31.5% when compared to the same quarter one year ago, falling from -$13.18 million to -$17.33 million.
- GEVO, with its decline in revenue, slightly underperformed the industry average of 7.6%. Since the same quarter one year prior, revenues fell by 11.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- GEVO INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GEVO INC continued to lose money by earning -$1.49 versus -$2.01 in the prior year. This year, the market expects an improvement in earnings (-$0.79 versus -$1.49).
- You can view the full analysis from the report here: GEVO Ratings Report