NEW YORK (TheStreet) -- Shares of Pacific Ethanol (PEIX) - Get Report are gaining, higher by 3.44% to $11.08 Wednesday morning, as shares of the low-carbon renewable fuels producer resumed trading after a deal to buy all of Aventine Renewable Energy's (AVRW) outstanding shares in a stock-for-stock merger transaction.
Trading of Pacific Ethanol stock was halted prior to the company's announcement until 9 a.m. ET today.
Pacific Ethanol CEO said the transaction will more than double its annual ethanol production capacity and will establish Pacific Ethanol as the fifth largest producer and marketer of ethanol in the U.S.
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Separately, TheStreet Ratings team rates PACIFIC ETHANOL INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate PACIFIC ETHANOL INC (PEIX) 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 solid stock price performance. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 6.7%. Since the same quarter one year prior, revenues rose by 17.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- PEIX's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.28, which clearly demonstrates the ability to cover short-term cash needs.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PACIFIC ETHANOL INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for PACIFIC ETHANOL INC is currently extremely low, coming in at 7.74%. Regardless of PEIX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.46% trails the industry average.
- You can view the full analysis from the report here: PEIX Ratings Report