Sticking With This Alto Ingredients Price Target Amid Turnaround
The small-cap firm enjoyed some strong results.
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On Wednesday evening, portfolio holding Alto Ingredients (ALTO) released the firm’s second quarter financial results.
For the period ended June 30, the specialty alcohol and renewable fuel provider posted a GAAP EPS of $0.15 on revenue of $245.698 million. The top-line print was good enough for year-over-year growth of 12.5%, while both of these top- and bottom-line numbers beat Wall Street’s expectations.
The cost of goods sold increased 3.9% to $229.062 million, leaving a gross profit/loss of $16.636 million, up from -$1.937 million. The firm’s GAAP operating income/loss improved from the year-ago comp of -$8.108 million to $8.619 million. After interest, transferable tax credits, other income and expenses and taxes, GAAP net income/loss landed at $11.701 million, up from -$10.997 million. This worked out to $0.15 per fully diluted share, up from -$0.15 for the year-ago period.
Turning to the balance sheet, the firm’s cash position stands at $23.962 million with inventories at $51.609 million. That put current assets at $160.824 million. Current liabilities ended the quarter at $50.397 million, including no short-term debt. As of quarter’s end, Alto’s current and quick ratios stood at 3.19 and 2.17, respectively. That’s better than simply “good.” A lot better. Total assets run at $397.07 million, very little of which is considered to be intangible. Total liabilities less equity comes to $137.193 million. This does include $60.469 million in longer-term debt. I don’t love that debt load, but it is not current. the firm can easily meet its obligations.
The CEO
President and CEO Bryon McGregor commented on the press release:
“Alto’s second quarter results mark the fourth consecutive quarter of positive gross profit, income from operations, net income and adjusted EBITDA. We have maintained consistent profitability over this period even before the contribution of earnings from 45Z tax credits. These results demonstrate the benefits of our diversification strategy.”
McGregor added:
“Having begun a strategic realignment three years ago, we now have a diversified product portfolio, a leaner cost structure and an operating model capable of generating positive adjusted EBITDA through commodity cycles while providing meaningful upside when market conditions are favorable. In addition, we have numerous initiatives in process and ahead of us to expand capacity, optimize CO2 production, improve efficiencies and increase our earnings from 45Z tax credits.”
Opinion
These results are strong. The company is clearly executing on its turnaround.
It’s sloppy, but it looks to your author that this stock may be trying to turn a double-top pattern of bearish reversal into a double-bottom pattern of bullish reversal. The portfolio added on weakness on Thursday and will add again on Friday. The $8 target price stands.
Around Wall Street
Analyst Eric Stine of Craig-Hallum reiterated his “buy” rating on ALTO along with his $8 target price. Stine is rated at five stars out of five by TipRanks. He has just a 47% success rate over two years but has generated an average return of 23.7%.
Analyst Amit Dayal of CHC Wainwright reiterated his “buy” rating on ALTO along with his $10 target price. Dayal is rated at four stars out of five by TipRanks. He has just a 40% success rate over two years but has generated an average return of 13.6%.
Upcoming Portfolio Earnings
Rocket Lab (RKLB): After the closing bell on Monday, August 10. Expected: Adjusted EPS of -$0.05 on revenue of $231 million.
Evolv Technologies (EVLV): After the closing bell on Tuesday, August 11. Expected: Adjusted EPS of -$0.02 on revenue of $41.81 million.
Velo3D (VELO): After the closing bell on Tuesday, August 11. Expected: Adjusted EPS of -$0.27 on revenue of $13.5 million.
Ondas Inc (ONDS): Ahead of the opening bell on Thursday, August 13. Expected: Adjusted EPS of -$0.07 on revenue of $68 million.
Thursday’s Intention vs Actual Trade
Intention: Sell 40 shares of (INSG) at or close to the last sale of $6.37
Actual trade: Sold 40 shares of INSG at $4.97
Intention: Purchase 25 shares of (ALTO) at or close to the last sale of $5.03
Actual trade: Bought 25 shares of ALTO at $4.59
Friday’s Intentions
Purchase 25 shares of ALTO at or close to the last sale of $4.67
Current Positions
Long 250 shares of ALTO at $5.2129. Target price: $8. Last sale: $4.67.
Long 80 shares of EVLV at $5.8959. Target price: $8.50. Last sale: $6.09.
Long 115 shares of (OCUL) at $8.3545. Target price: $11. Last sale: $8.96.
Short one OCUL $11 Septemeber 18 call at $1.65. Last sale: $0.51.
Long 250 shares of ONDS at $8.4266. Target price: $14. Last sale: $8.98.
Long 50 shares of (PL) at $24.4758. Target price: $46. Last sale: $24.00.
Long 6 shares of (RKLB) at $69.24. Target price: $98. Last sale: $81.14.
Long 100 shares of (SOFI) at $15.7153. Target price: $24. Last sale: $18.29.
Long 40 shares of (SWBI) at $15.5143. Target price: $19. Last sale: $14.50.
Long 115 shares of VELO at $12.1201. Target price: $18. Last sale: $14.08.
Cash: $572.29.
Portfolio Value: $11,149.51, +11.5% from inception on March 24.
At the time of publication, Guilfoyle was long ALTO, EVLV, OCUL, ONDS, PL, RKLB, SOFI, SWBI and VELO.
