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Alto Ingredients Surges 45% in a Year: Time to Buy the Stock?
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Key Takeaways
ALTO shares surged 45.4% in a year, beating the industry and major benchmarks with bullish trading signals.
ALTO is shifting from ethanol to specialty alcohols and CO capture to diversify and boost margins.
Despite growth plans, ALTO trades at a premium with weak returns and is expected to stay unprofitable in 2025.
Shares of Alto Ingredients (ALTO - Free Report) have gained 45.4% in a year, outperforming the industry, its sector as well as the Zacks S&P 500 composite. This leading producer and distributor of specialty alcohols, renewable fuels and essential ingredients in the United States is poised to gain from its compelling portfolio, its focus on customer relationships, and by leveraging technologies.
ALTO stock has moved above its 50- as well as 200-day simple moving average (SMA), signaling a bullish trend. The 50-day and 200-day SMAs are key indicators for traders and analysts to identify support and resistance levels. These are considered particularly important as they are the first markers of an uptrend or downtrend.
1-Year Price Performance of ALTO
Image Source: Zacks Investment Research
ALTO’s peer, Green Plains Inc. (GPRE - Free Report) has gained 2.4% in a year, while another peer, Gevo, Inc. (GEVO - Free Report) , has lost 24% in the same time frame.
ALTO Shares Are Expensive
The stock is overvalued compared with its industry. It is currently trading at a price-to-earnings multiple of 16.63, higher than the industry average of 15.95 but above the median of 5.56 over three years.
Image Source: Zacks Investment Research
ALTO is relatively cheap compared to Green Plains but expensive compared to Gevo.
The Case for ALTO Stock
Alto Ingredients is undergoing a strategic transformation from a traditional fuel ethanol producer into a more diversified platform centered on specialty alcohols and essential ingredients. By leveraging its long operating history and existing production assets, the company aims to reposition its business toward higher-value, quality-focused end markets with more stable demand and improved margins.
The company has broadened its product portfolio beyond commodity ethanol to include specialty alcohols and ingredients used in pharmaceutical, personal care, food, and industrial applications. This shift is intended to diversify revenues, reduce reliance on volatile ethanol pricing and extract greater value from Alto’s established infrastructure and customer relationships.
Its strategic focus includes lowering carbon intensity scores to benefit from the federal Section 45Z clean fuel tax credit program. Management is prioritizing projects that offer capital efficiency, timely execution and attractive returns while improving environmental performance. If targeted carbon intensity reductions are achieved and credits are effectively monetized, Section 45Z could provide up to $18 million in incremental gross benefit during 2025–2026.
Alto is also expanding carbon dioxide capture and utilization at its Pekin and Columbia facilities, building on the Carbonic acquisition. By monetizing fermentation-derived CO???, the company is adding a higher-margin revenue stream that supports sustainability goals and further diversifies earnings.
Operational discipline remains a core focus area. Alto continues to streamline its cost structure, exit underperforming activities and concentrate capital on near-term projects with clear cost and return visibility. Early benefits from this realignment, including growth in renewable fuel export sales, highlight the flexibility of its operating platform.
Despite these positives, risk remains. The business is capital-intensive and sensitive to corn and natural gas price fluctuations. It has posted losses over the past four years and is expected to remain unprofitable in 2025, with returns on equity and invested capital below industry averages, reflecting ongoing execution risk.
Muted Analyst Sentiment
The Zacks Consensus Estimate for 2026 revenues indicates a 10.5% year-over-year increase, while that for earnings implies a 200.6% year-over-year increase.
Image Source: Zacks Investment Research
The consensus estimate for 2026 earnings witnessed no movement in the past 30 days.
The consensus estimate for 2026 earnings of Green Plains and Gevo also witnessed no movement in the past 30 days.
Parting Thoughts on ALTO Shares
Alto’s transition, strategic buyouts, focus on lowering carbon intensity score, cost control efforts and its VGM Score of A instill confidence. However, current factors warrant caution. With the stock trading at a premium, returns on capital comparing unfavorably with the industry, looming near-term earnings pressure and muted analyst sentiment, maintaining a wait-and-see stance appears to be a sensible approach for this Zacks Rank #3 (Hold) stock.
Image: Bigstock
Alto Ingredients Surges 45% in a Year: Time to Buy the Stock?
Key Takeaways
Shares of Alto Ingredients (ALTO - Free Report) have gained 45.4% in a year, outperforming the industry, its sector as well as the Zacks S&P 500 composite. This leading producer and distributor of specialty alcohols, renewable fuels and essential ingredients in the United States is poised to gain from its compelling portfolio, its focus on customer relationships, and by leveraging technologies.
ALTO stock has moved above its 50- as well as 200-day simple moving average (SMA), signaling a bullish trend. The 50-day and 200-day SMAs are key indicators for traders and analysts to identify support and resistance levels. These are considered particularly important as they are the first markers of an uptrend or downtrend.
1-Year Price Performance of ALTO
Image Source: Zacks Investment Research
ALTO’s peer, Green Plains Inc. (GPRE - Free Report) has gained 2.4% in a year, while another peer, Gevo, Inc. (GEVO - Free Report) , has lost 24% in the same time frame.
ALTO Shares Are Expensive
The stock is overvalued compared with its industry. It is currently trading at a price-to-earnings multiple of 16.63, higher than the industry average of 15.95 but above the median of 5.56 over three years.
Image Source: Zacks Investment Research
ALTO is relatively cheap compared to Green Plains but expensive compared to Gevo.
The Case for ALTO Stock
Alto Ingredients is undergoing a strategic transformation from a traditional fuel ethanol producer into a more diversified platform centered on specialty alcohols and essential ingredients. By leveraging its long operating history and existing production assets, the company aims to reposition its business toward higher-value, quality-focused end markets with more stable demand and improved margins.
The company has broadened its product portfolio beyond commodity ethanol to include specialty alcohols and ingredients used in pharmaceutical, personal care, food, and industrial applications. This shift is intended to diversify revenues, reduce reliance on volatile ethanol pricing and extract greater value from Alto’s established infrastructure and customer relationships.
Its strategic focus includes lowering carbon intensity scores to benefit from the federal Section 45Z clean fuel tax credit program. Management is prioritizing projects that offer capital efficiency, timely execution and attractive returns while improving environmental performance. If targeted carbon intensity reductions are achieved and credits are effectively monetized, Section 45Z could provide up to $18 million in incremental gross benefit during 2025–2026.
Alto is also expanding carbon dioxide capture and utilization at its Pekin and Columbia facilities, building on the Carbonic acquisition. By monetizing fermentation-derived CO???, the company is adding a higher-margin revenue stream that supports sustainability goals and further diversifies earnings.
Operational discipline remains a core focus area. Alto continues to streamline its cost structure, exit underperforming activities and concentrate capital on near-term projects with clear cost and return visibility. Early benefits from this realignment, including growth in renewable fuel export sales, highlight the flexibility of its operating platform.
Despite these positives, risk remains. The business is capital-intensive and sensitive to corn and natural gas price fluctuations. It has posted losses over the past four years and is expected to remain unprofitable in 2025, with returns on equity and invested capital below industry averages, reflecting ongoing execution risk.
Muted Analyst Sentiment
The Zacks Consensus Estimate for 2026 revenues indicates a 10.5% year-over-year increase, while that for earnings implies a 200.6% year-over-year increase.
Image Source: Zacks Investment Research
The consensus estimate for 2026 earnings witnessed no movement in the past 30 days.
The consensus estimate for 2026 earnings of Green Plains and Gevo also witnessed no movement in the past 30 days.
Parting Thoughts on ALTO Shares
Alto’s transition, strategic buyouts, focus on lowering carbon intensity score, cost control efforts and its VGM Score of A instill confidence.
However, current factors warrant caution. With the stock trading at a premium, returns on capital comparing unfavorably with the industry, looming near-term earnings pressure and muted analyst sentiment, maintaining a wait-and-see stance appears to be a sensible approach for this Zacks Rank #3 (Hold) stock.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.