Green Plains (NASDAQ: GPRE) and Pacific Ethanol (NASDAQ:PEIX) are both small-cap basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, valuation, earnings, institutional ownership, risk, analyst recommendations and profitability.

Dividends

Green Plains pays an annual dividend of $0.48 per share and has a dividend yield of 2.9%. Pacific Ethanol does not pay a dividend. Green Plains pays out 67.6% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Green Plains and Pacific Ethanol, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Green Plains 0 0 6 0 3.00
Pacific Ethanol 0 0 3 0 3.00

Green Plains currently has a consensus price target of $25.33, suggesting a potential upside of 54.94%. Pacific Ethanol has a consensus price target of $13.00, suggesting a potential upside of 213.25%. Given Pacific Ethanol’s higher probable upside, analysts plainly believe Pacific Ethanol is more favorable than Green Plains.

Insider & Institutional Ownership

79.7% of Pacific Ethanol shares are held by institutional investors. 6.4% of Green Plains shares are held by insiders. Comparatively, 3.9% of Pacific Ethanol shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility & Risk

Green Plains has a beta of 1.57, indicating that its stock price is 57% more volatile than the S&P 500. Comparatively, Pacific Ethanol has a beta of 2.13, indicating that its stock price is 113% more volatile than the S&P 500.

Profitability

This table compares Green Plains and Pacific Ethanol’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Green Plains 0.92% -0.88% -0.35%
Pacific Ethanol -0.51% -2.13% -1.23%

Earnings & Valuation

This table compares Green Plains and Pacific Ethanol’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Green Plains $3.41 billion 0.20 $10.66 million $0.71 23.03
Pacific Ethanol $1.62 billion 0.11 $1.41 million ($0.24) -17.29

Green Plains has higher revenue and earnings than Pacific Ethanol. Pacific Ethanol is trading at a lower price-to-earnings ratio than Green Plains, indicating that it is currently the more affordable of the two stocks.

Summary

Green Plains beats Pacific Ethanol on 10 of the 14 factors compared between the two stocks.

About Green Plains

Green Plains Inc. is an ethanol producer. The Company owns and operates assets throughout the ethanol value chain, including upstream, with grain handling and storage through its ethanol production facilities, and downstream, with marketing and distribution services. It operates through four segments: Ethanol Production, Agribusiness and Energy Services, Food and Food Ingredients, and Partnership. The ethanol production segment includes production of ethanol, distillers grains and corn oil. The agribusiness and energy services segment includes grain procurement. The food and food ingredients segment includes a cattle feedlot operation. The Company’s master limited partnership, Green Plains Partners LP (the partnership), provides fuel storage and transportation services by owning, operating, developing and acquiring ethanol and fuel storage tanks, terminals, transportation assets and other related assets and businesses.

About Pacific Ethanol

Pacific Ethanol, Inc. (Pacific Ethanol) is a marketer and producer of low-carbon renewable fuels in the Western United States. Pacific Ethanol markets all the ethanol produced by four ethanol production facilities located in California, Idaho and Oregon, or the Pacific Ethanol Plants, all the ethanol produced by three other ethanol producers in the Western United States and ethanol purchased from other third-party suppliers throughout the United States. It also markets ethanol co-products, including wet distiller’s grains and syrup (WDG), for the Pacific Ethanol Plants. Its 83% ownership interest in New PE Holdco LLC, the owner of each of the plant holding companies, that collectively own the Pacific Ethanol Plants. Its ethanol customers are integrated oil companies and gasoline marketers who blend ethanol into gasoline. Effective September 02, 2014, Pacific Ethanol Inc raised its interest to 96% from 91%, by acquiring a 5% interest, in PE Op Co.

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