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What Awaits Renewable Energy Group (REGI) in Q4 Earnings?

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Renewable Energy Group, Inc. (REGI - Free Report) is set to report fourth-quarter 2020 results on Feb 25, after market close. In the last reported quarter, the company delivered a negative earnings surprise of 11.76%.

However, in the trailing four quarters, Renewable Energy Group came up with a massive earnings surprise of 1,533.24 %, on average.

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

Factors to Consider

From the third quarter of 2019, Renewable Energy Group started witnessing gradual stability in the economic environment, which is expected to have boosted the entire demand scenario. Notably, a more stable biodiesel demand accompanied with comparatively less volatile price situation is likely to have contributed to its quarterly top line. For instance, in Europe, the company has been lately observing an increase in price for biodiesel driven by increased local environmental mandates and increase in fuel consumption as significant holiday traffic there moved from airplane to on-road vehicles.

 

With the economic recovery, demand for renewable diesel has also started to grow thereby further contributing to the company’s revenue performance. However, in the wake of the pandemic, jet fuel demand still remains poor as the commercial aerospace has not yet been fully operational across the globe. This might have had an adverse impact on the company’s top line.

Notably, the Zacks Consensus Estimate for fourth-quarter revenues, pegged at $529.3 million, indicates a 3.5% rise from the year-ago quarter’s reported figure.

Even though much of the global economy reopened for trade, the significant decline in demand for fuels continued in the fourth quarter, which in turn must have resulted in decreased demand for Renewable Energy’s products and a decline in prices of products. This in turn may have hurt the stock’s margin and thereby its earnings in the soon-to-be-reported quarter.

The Zacks Consensus Estimate for fourth-quarter earnings per share is pegged at 67 cents indicating a 44.6% decline from the year-ago quarter’s figure.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Renewable Energy Group 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. But this is not the case here.

Earnings ESP: Renewable Energy Group has an Earnings ESP of +6.93%. 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 #4 (Sell). You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Investors can consider the following players from the same sector that have the right combination of elements to post an earnings beat this season and are yet to release their results.

Crestwood Equity Partners LP (CEQP - Free Report) is expected to release fourth-quarter 2020 results on Feb 23. It has an Earnings ESP of +4.62% and a Zacks Rank #3.

Ecopetrol S.A. (EC - Free Report) is set to release fourth-quarter 2020 results on Feb 23. It has an Earnings ESP of +10.64% and a Zacks Rank #2.

Falcon Minerals Corp (FLMN - Free Report) is expected to release fourth-quarter 2020 results soon. It has an Earnings ESP of +16.67% and a Zacks Rank #3.

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