Small-Cap Stock on Watch: Biofuel Energy Corp. (BIOF)
  • Stock Alert for BioFuel Energy Corp. (BIOF)
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    Stock Alert for BioFuel Energy Corp. (BIOF)

    BioFuel Energy Corp. (BIOF) produces and sells ethanol and its co-products (primarily distillers grain), through its two ethanol production facilities located in Wood River, Nebraska and Fairmont, Minnesota. The Company’s ethanol plants are owned and operated by the operating subsidiaries of the BioFuel Energy LLC (the LLC). The Company produces ethanol at both of its plants, each having a nameplate capacity of approximately 115 million gallons per year (Mmgy). The Company’s primary source of revenue is the sale of ethanol. It also receives revenue from the sale of distillers grain, which is a residual co-product of the processed corn used in the production of ethanol and is sold as animal feed. BIOF intends to become a leading ethanol producer in the United States by acquiring, developing, owning and operating ethanol production facilities.

    Share Statistics (31-Oct-11) FY2009 FY2010 % Chg Q22010 Q22011 % Chg
    Symbol BIOF Revenue, $Mn 415.51 453.42 109.1% 96.40 168.53 74.8%
    Current price $0.50 Gross marg. 2.6% -0.3% -111.5% -6.4% -2.2% -65.6%
    52wk Range: $0.15-$2.48 Oper. margin -3.00% -3.8%
    Avg Vol (3m): 203,188 Net margin -3.3% -4.4% 33.3% -9.8% -4.2% -57.1%
    Market Cap. 50.85M
    Shares Outstanding 102.39M EPS, $ -0.57 -0.79 38.6% -0.37 -0.07 -81.1%

    Source: Reuters.com, SEC Filings.

    Investment Highlights

    Shares of the Denver-based ethanol production company jumped as much as 50% Monday, their third day of advances in a row. Over 1.80 million shares traded hands during the session, versus  the 10-day average of 464.61K. Over the past 52 weeks, the stock has reached a low of $0.15 and a high of $2.48.  It is currently trading above its 50-day moving average of $0.24 and above its 200-day moving average of $0.42.

    Shares of BIOF have jumped 130.8% in the last five days and 161.2% in the last month.  Year-to-date, the stock is down 77.8%.

    BIOF in August announced second-quarter revenues of $168.5 million, up 75% from the same period last year. The latest period saw a net loss of $8.3 million, narrowing the net loss of $8.3 million a year earlier. The net loss attributable to common stockholders was $7.0 million, or $0.07 per share, down from $9.4 million, or $0.37 per share, for the same period in 2010.

    As BIOF had anticipated, the second quarter proved to be a very challenging period for the Company, with the industry experiencing narrow commodity margins, stated Scott H. Pearce, BIOF president and CEO.  However, since mid-June, commodity margins have improved, which BIOF believes is due to an uptick in demand from the summer driving season and several macroeconomic factors.

    Pearce went on to say that the Company remains operationally on track with several planned improvements, the most significant being implementing corn oil extraction at its plants.

    At June 30, 2011, BIOF had $183.1 million in term loans outstanding under its senior debt facility.  At June 30, 2011, the Company held $8.0 million of cash and cash equivalents and equity totaled $92.1 million, including $4.5 million of noncontrolling interest.

    BIOF is set to announce its third quarter 2011 results on November 9, 2011, after the closing bell.

    Source: http://biz.yahoo.com/e/110812/biof10-q.html

    Financial Strength (31-Oct-2011)

    Company

    Industry

    Sector

    S&P 500

    Quick Ratio (MRQ) 0.94 2.89 0.61 0.61
    Current Ratio (MRQ) 1.57 7.51 0.87 0.95
    LT Debt to Equity (MRQ) 197.77 16.14 17.16 98.48
    Total Debt to Equity (MRQ) 212.39 18.69 21.77 139.12
    Interest Coverage (TTM) -0.72 -15.34 10.34 20.19

    Source: Reuters.com, SEC Filings.

    Technical Analysis

     

    Source: http://stockcharts.com

    BIOF is above the upper Bollinger Band, implying that it is currently extended from its recent trend. Be aware, however, that a cross outside of the Bollinger Bands can sometimes be a signal of trend strength and not, necessarily, trend reversal.

    The MACD for BIOF currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0 which implies that the underlying moving averages are trending higher.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    Oct31-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
    Archer Daniels Midland Company ADM 29.25 19.77B 9.41 8.63 0.23 0.23
    Valero Energy Corp. VLO 24.83 14.21B 5.46 5.79 0.12 0.12
    Specialty Chemicals Median       10.64 n/a 0.65 n/a
    BioFuel Energy Corp. BIOF 0.50 50.88M n/a n/a 0.10 0.09

    Source: Thomson Financial

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