Gevo Stock Gains After Fuel Receives National Marine Manufacturers Endorsement

NEW YORK (TheStreet) -- Shares of Gevo (GEVO) were gaining 5.8% to $3.92 Wednesday after the biofuels company announced that the National Marine Manufacturers Association (NMMA) endorsed the use of its renewable isobutanol in the marine fuel market.

Gevo said the NMMA supported the use of the renewable isobutanol as an "effective, less damaging, more suitable biofuel alternative than ethanol" for marina and recreational boat engines.

The company said studies of renewable isobutanol show it provides higher energy, prevents moisture absorption and phase separation, and reduces engine corrosion.

The NMMA said biobutanol fuel blends are safe and viable ethanol alternatives at mixes of up to 16.1% isobutanol by volume.

"We believe that the marine industry will be an important market for Gevo's isobutanol. The technical properties of isobutanol shine in this application," Gevo CEO Dr. Patrick Gruber said. "We appreciate the efforts and the collaboration between Gevo and the NMMA throughout the testing program."

TheStreet Ratings team rates GEVO INC as a Sell with a ratings score of E+. TheStreet Ratings Team has this to say about their recommendation:

"We rate GEVO INC (GEVO) a SELL. This is based on some significant below-par investment measures, which should drive this stock to significantly underperform the majority of stocks that we rate. Among the areas we feel are negative, one of the most important has been a generally disappointing historical performance in the stock itself."

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

  • GEVO's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 73.24%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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 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. 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.
  • The debt-to-equity ratio is somewhat low, currently at 0.79, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.47 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Net operating cash flow has increased to -$9.49 million or 26.92% when compared to the same quarter last year. In addition, GEVO INC has also vastly surpassed the industry average cash flow growth rate of -53.28%.
  • GEVO 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, GEVO INC continued to lose money by earning -$8.40 versus -$22.35 in the prior year. This year, the market expects an improvement in earnings (-$3.37 versus -$8.40).
  • You can view the full analysis from the report here: GEVO Ratings Report

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