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What's in Store for Pacific Ethanol's (PEIX) Q3 Earnings?

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Pacific Ethanol, Inc. is set to report third-quarter 2020 financial results on Nov 9, after market close.

In the trailing four quarters, the company came up with a negative earnings surprise of 58.52%, on average.

Let's take a closer look at the factors influencing the company’s upcoming quarterly results.

Factors Under Consideration

Over the past couple of quarters, the company has been witnessing a decline in revenues resulting from the reduction in fuel ethanol gallon sales, on account of the slowdown of fuel ethanol production and associated co-products following lower demand during the pandemic.

With the pandemic gaining steam again, we may expect this trend to have continued in the third quarter as well and negatively impacted the company’s top-line performance. Currently, the Zacks Consensus Estimate for third-quarter revenues, pegged at $203.9 million, indicates a 44.2% decline from the year-ago quarter’s tally.

During the second-quarter earnings call, Pacific Ethanol's management announced that it anticipates selling, general and administrative expenses (SG&A) to be on the lower end for the second half of 2020, as it continues to resolve existing debt issues. Moreover, it expected its idling costs and labor costs to decline for the second half of 2020.

Moreover, during the third quarter, Pacific Ethanol started modifying and refurbishing its existing equipment to increase the production capacity of USP-grade alcohol by an additional 30 million gallons by the end of 2020. The manufacturing of the higher-quality products has most likely bumped up quarterly production costs. But since such high-quality alcohol is traditionally sold at fixed prices and volumes with longer commitments than ethanol, it offers improved margins, which might have boosted the company’s earnings in the third quarter.

The Zacks Consensus Estimate for third-quarter earnings per share is pegged at 20 cents, suggesting an improvement from the year-ago quarter’s loss per share of 58 cents.

Earnings Whispers

Our proven model predicts an earnings beat for Pacific Ethanol this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: Pacific Ethanol has an Earnings ESP of +35.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pacific Ethanol, Inc. Price and EPS Surprise

Other Stocks to Consider

Investors can also consider the following players from the same sector that have the right combination of elements to post an earnings beat this season.

Cheniere Energy (LNG - Free Report) is set to release third-quarter 2020 results on Nov 6. It has an Earnings ESP of +31.36% and a Zacks Rank #3.

Peabody Energy Corporation (BTU - Free Report) is set to release third-quarter 2020 results on Nov 9. It has an Earnings ESP of +16.28% and a Zacks Rank #3.

A Recent Sector Release

TOTAL SE (TOT - Free Report) reported third-quarter 2020 operating earnings of 29 cents (€0.24) per share, which beat the Zacks Consensus Estimate of 8 cents by 262.5%.

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