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Bear of the Day: Green Plains, Inc. (GPRE)

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Green Plains (GPRE - Free Report) , a Zacks Ranked #5 (Strong Sell), is a vertically integrated producer, marketer and distributer of ethanol. The company operates through four segments: Ethanol Production, Corn Oil Production, Agribusiness, and Marketing and Distribution. It produces ethanol and co-products, such as wet, modified wet or dried distillers grains, as well as extracts non-edible corn oil. The company is also involved in buying and selling bulk grain primarily corn and soybeans. Green Plains Inc., formerly known as Green Plains Renewable Energy, Inc., is headquartered in Omaha, Nebraska.

Recent Earnings Report

On Monday the company reported Q2 17 earnings where they significantly missed both the Zacks consensus earnings estimate (-$0.41 actual vs. -$0.11 estimated), and revenue estimate ($886.3 million actual vs. $1 billion estimate).  Management cited weak ethanol margins as the main culprit behind the large miss.  On a year over year basis, the company saw declines in the following; net loss attributable was $16.4 million verse net income of $8.2 million, and consolidated revenues fell by $1.5 million. Management stated that “revenues were impacted by decreased grain trading activity and lower average realized prices for distillers’ grains.”

Management’s Take

According to Todd Baker, president and CEO, “While we’re not happy with the bottom line results this quarter, our balance sheet remains strong and we will continue to focus on growing and diversifying our business going forward. Based on current markets, we expect better performance in the third and fourth quarters and will move quickly to reduce volatility and lock away margins as they expand from here.”

Price and Earnings Consensus Graph

As you can see in the graph below, the recent earnings report caused both the stock price and future estimates to decrease.

Green Plains, Inc. Price and Consensus

Green Plains, Inc. Price and Consensus | Green Plains, Inc. Quote

Declining Earnings Estimates

Due to the large top and bottom miss, earnings estimates for Q3 17, Q4 17, FY 17 and FY 18 have all seen negative revisions over the past few days; Q3 17 fell from $0.29 to $0.26, Q4 17 dropped from $0.36 to $0.17, FY 17 plummeted from $0.61 to $0.23, and FY 18 was trimmed from $1.56 to $1.34.

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