Marketwatch: What’s in Store for this Renewable Energy Small-Cap?
Pacific Ethanol gets a much needed boost from recent earnings reports, but the PPS surge may have run out of fuel without Uncle Sam chipping in for gas money
Pacific Ethanol Inc. (NASDAQ: PEIX) Tuesday released its second-quarter earnings; the company’s second-quarter net income amounted to $107.8 million, or $1.43 per share, compared to a $28.2 million loss for the same period last year.
The company’s second-quarter sales improved 9% to $76.8 million, from $70.1 million a year ago, and similarly to net income, the 2Q loss of $2.7 million, fared much better than the $7.8 million loss for the same three-month period one year prior. The huge reversal of business fortune came as a result of Pacific Ethanol’s holding company and four plant subsidiaries coming out of bankruptcy and eliminated $295 million in debt.
The earnings report helped to spur huge gains in share price Tuesday morning rallying it up to $0.79 per share, yet in a showing of uncertainty the rally spurred a major selloff eventually dragging the share price back down to $0.66 per share down 8.82%.
The selloff signifies the potential troubled future in store for Pacific Ethanol. Its revenues are meager at best, and while the potential for this industry to revolutionize the way we consume combustible fuels is extremely realistic, without serious government subsidies it will likely flounder for many years.
Pacific Ethanol seems to have recognized this fact and recently announced that the company received confirmation from the California Energy Commission accepting the participation by Pacific Ethanol Madera, LLC and Pacific Ethanol Stockton, LLC into the California Ethanol Producer Incentive Program (CEPIP). The CEPIP is designed to provide payments to eligible operating California ethanol producers under specific unfavorable economic conditions and requires reimbursement by participants to the state of any outstanding CEPIP payment balances under specifically identified favorable economic conditions.
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