Renewable Energy Group Inc Stock Upgraded (REGI)

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.

NEW YORK ( TheStreet) -- Renewable Energy Group (Nasdaq: REGI) has been upgraded by TheStreet Ratings from sell to hold. 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 find that the company's profit margins have been poor overall.

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Highlights from the ratings report include:
  • REGI's very impressive revenue growth greatly exceeded the industry average of 7.9%. 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.
  • 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 $4.70 versus $0.67 in the prior year. For the next year, the market is expecting a contraction of 81.1% in earnings ($0.89 versus $4.70).
  • 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.

Renewable Energy Group, Inc. produces and sells advanced biofuels and renewable chemicals in the United States. The company operates through two segments, Biodiesel and Services. Renewable Energy Group has a market cap of $441 million and is part of the basic materials sector and energy industry. Shares are up 4.4% year to date as of the close of trading on Wednesday.

You can view the full Renewable Energy Group Ratings Report or get investment ideas from our investment research center.

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