Green Plains: Self-made Biorefiner, Protein Supplier

Green Plains, Inc. (GPRE:  Nasdaq) is on the calendar to release financial results for the second quarter ending June 2022, on August 2^nd before the market open.  The report will be held up against a consensus expectation for $0.15 per share in the quarter.  The company has missed the common view in each of the previous four quarters, so traders should not hold out for a ‘beat’ in this quarter, unless a one-time event or accounting treatment helps pad the bottom line.

Traders may be more interested in hearing more from Green Plains management about a recently announced partnership with Riverence Group,  a sustainable aquaculture enterprise focused on salmon and trout.  The two are forming a joint venture to expand aquafeed production in Idaho where Riverence operates fish farms.  Green Plains recently a successful production trial of 60%+ fermented protein product.

Fermented fish food is a distance from Green Plains origins as an ethanol producer.  Over the years the company has cast about for by-products of the biorefining process that can be used to improve production margins.  Cattle feed has long-been one of those by-products in the form of distiller grains.  Since the early days, the company has added corn oil and high-protein feed products to its ethanol and distiller grains product portfolio 

Aquaculture represents a new venture that could bring out meaningful profits for Green Plains.  Riverence is a privately-held company, but reportedly has approximately $71. 0 million in annual revenue.  It is likely profitable, making it a strong partner.   For its part, Riverence will be able to claim a low-carbon feed input on top of getting a highly efficient, high protein food.  Two factors that can boost sales and profit margins.

GPRE has shown considerable momentum in recent sessions, gapping higher twice in the last two weeks.  Leading into the earnings announcement the stock is deep in overbought territory, according to the commodity channel index.  We also note that as the week as progressed the stock completed formation of a particularly bullish signal in a candlestick chart called the Three White Soldiers.  The signal consists of three sequentially higher long, white candlesticks that demonstrate the force of demand under the shares.  The signal came just as the stock gapped higher two days in a row.  Of course, GPRE has not been immune from the vagaries of the U.S. equity market, trading up and down in sympathy with broader ‘risk-on’ and ‘risk-off’ sentiment.

 

 

 

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.