Critical Survey: Pacific Ethanol (PEIX) vs. Renewable Energy Group (REGI)

Pacific Ethanol (NASDAQ: PEIX) and Renewable Energy Group (NASDAQ:REGI) are both small-cap oils/energy companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, earnings, analyst recommendations, institutional ownership, valuation, risk and profitability.

Insider & Institutional Ownership

78.1% of Pacific Ethanol shares are held by institutional investors. 3.9% of Pacific Ethanol shares are held by company insiders. Comparatively, 2.0% of Renewable Energy Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Pacific Ethanol and Renewable Energy Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Pacific Ethanol $1.63 billion 0.07 -$34.96 million ($0.85) -3.06
Renewable Energy Group $2.16 billion 0.30 -$79.07 million ($2.04) -8.48

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

Volatility and Risk

Pacific Ethanol has a beta of 2.02, suggesting that its share price is 102% more volatile than the S&P 500. Comparatively, Renewable Energy Group has a beta of 1, suggesting that its share price has a similar volatility profile to the S&P 500.

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pacific Ethanol 0 0 3 0 3.00
Renewable Energy Group 0 1 2 0 2.67

Pacific Ethanol currently has a consensus price target of $11.33, indicating a potential upside of 335.90%. Renewable Energy Group has a consensus price target of $18.00, indicating a potential upside of 4.05%. Given Pacific Ethanol’s stronger consensus rating and higher possible upside, analysts clearly believe Pacific Ethanol is more favorable than Renewable Energy Group.

Profitability

This table compares Pacific Ethanol and Renewable Energy Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pacific Ethanol -1.83% -7.78% -4.22%
Renewable Energy Group 6.01% 29.06% 15.69%

Summary

Pacific Ethanol beats Renewable Energy Group on 8 of the 14 factors compared between the two stocks.

About Pacific Ethanol

Pacific Ethanol, Inc. produces and markets low-carbon renewable fuels in the United States. The company operates in two segments, Production and Marketing. It produces and markets ethanol; specialty alcohols; and co-products, such as wet distillers grains, dry distillers grains with solubles, wet and dry corn gluten feed, condensed distillers solubles, corn gluten meal, corn germ, corn oil, distillers yeast, and CO2, as well as markets ethanol produced by third parties. The company also offers ethanol transportation, storage, and delivery services through third-party service providers. It sells ethanol to integrated oil companies and gasoline marketers; distillers grains and other feed co-products to dairies and feedlots; and corn oil to poultry and biodiesel customers. The company owns and operates nine ethanol production facilities in the Western states of California, Oregon, and Idaho; and in the Midwestern states of Illinois and Nebraska. Pacific Ethanol, Inc. was founded in 2003 and is headquartered in Sacramento, California.

About Renewable Energy Group

Renewable Energy Group, Inc. produces and sells biofuels and renewable chemicals in North America. The company operates through Biomass-Based Diesel, Services, Renewable Chemicals, and Corporate and Other segments. It acquires feedstock; and manages construction and operates biomass-based diesel production facilities. The company also produces biomass-based diesel from a range of feedstocks, including inedible corn oil, used cooking oil, and inedible animal fat, as well as soybean or canola oil; and markets, distributes, and sells biomass-based diesel and its co-products. In addition, it is involved in the purchase and resale of biomass-based diesel, petroleum-based diesel, renewable identification numbers, California Low Carbon Fuel Standard credits, and raw material feedstocks acquired from third parties; and sale of glycerin, free fatty acids, naphtha, and other co-products of the biomass-based diesel production process. Further, the company provides facility management and operational services to biomass-based diesel production facilities, as well as to other clean-tech companies; and construction management services for biomass-based diesel production facilities. Additionally, it engages in the production of renewable chemicals, advanced biofuels, and other products; and trading of petroleum-based heating oil and diesel fuel. Renewable Energy Group, Inc. was founded in 1996 and is headquartered in Ames, Iowa.

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