Gevo Inc (NASDAQ: GEVO) is having a rough start to the trading session in the premarket hours this morning after announcing its quarterly financial results. Unfortunately, revenue and earnings missed estimates.
Nonetheless, the declines may be an opportunity to get in on future gains at an incredible discount. Here’s what’s going on:
Skip to What You Want to Read
- Gevo Announces Quarterly Financial Results
- The Declines Could Be an Opportunity
- What Analysts Think About GEVO Stock
- Final Thoughts
Gevo Announces Quarterly Financial Results
As mentioned above, Gevo is having a rough start to the trading session after releasing its quarterly financial results. The results were generated in the fourth quarter of 2020. Here’s what we saw:
- Losses. During the fourth quarter, GEVO generated a loss of $0.07 per share. While that figure shows incredible growth from the loss of $0.50 per share that was reported last year, the company missed analyst expectations of $0.04 per share.
- Revenue. Revenue was a painful figure, and likely led to the declines we’re seeing this morning. During the quarter, the company produced revenue in the amount of $0.53 million, that figure was down from revenue a year ago in the amount of $6.89 million. Unfortunately, this figure also missed analyst expectations.
While analysts expected to see a significant reduction in revenue on a year over year basis, that reduction was bigger than anyone wanted to see. Moreover, while losses are shrinking, they didn’t shrink enough to meet expectations. Between the two, we have the catalyst for the declines today.
The Declines Could Be an Opportunity
Warren Buffett teaches investors to buy when fear is high and sell when the market is greedy. Well, the declines caused by the missed revenue and earnings expectations may prove to be a major opportunity at the moment.
The fact of the matter is that GEVO stock isn’t a stock to buy for the hopes of strong performance now, it’s the stock to buy for strong performance later. Let’s not forget, the world is making a shift to clean energy, and when it comes to clean, sustainable fuels, Gevo is further ahead than any other company in the game.
Moreover, the company is working on an aggressive expansion of its infrastructure, giving it the ability to produce more clean fuels, generating stronger revenues. At the same time, the company has signed multiple sustainable fuel supply agreements, one of the big reasons it plans on ramping up production.
However, we’re not going to see revenue from these agreements for a few more quarters as the company continues to ramp up to meet the demand of the other parties in the agreements.
When this takes place, revenue is likely to grow substantially and the company could quickly run to profitability. Considering the current weakness based on numbers that are more ansillary than anything else, especially when you think about what’s ahead, GEVO stock may represent a massive opportunity at these levels.
What Analysts Think About GEVO Stock
I’m not the only person that believes Gevo stock represents an opportunity. In fact, analysts seem to love the stock.
According to TipRanks, there are two analysts weighing in on the stock, both of which rate it a Buy. Price targets on the stock are $16 and $18, with a median target of $17. Considering the price targets here, there’s potential for tremendous gains ahead.
All in all, the financial results issued by GEVO proved to be somewhat painful. However, as mentioned above, the company’s past is not likely an indication of the future.
With legislation likely to come down the line, benefitting companies in the clean energy space, and a global push to go green, clean, renewable fuels will become more and more important as time passes. As the company continues to build out its infrastructure, it’s setting the stage to be a leader in this space. All in all, GEVO stock looks to me like a buy the dip opportunity.