Why Renewable Energy Group Inc.'s Shares Jumped 29% in March

By Stocks Fool.com

Image source: Renewable Energy Group.

Continue Reading Below

What: Shares of biofuels company Renewable Energy Group Inc. rose 29% in March after reporting better-than-expected earnings.

So what: Revenue rose 15% from a year ago to $387.8 million on the back of a 33% increase in volume. But the company reported a net loss of $95.6 million, or $2.18 per share. That figure included a $175.0 million non-cash charge related to goodwill, and if you pulled that out, it earned $1.81 per share. That's the figure that investors got excited about in the quarter.

Now what: The bottom-line adjusted net income number may have beaten expectations, but the business is still struggling fundamentally. Adjusted EBITDA, which is a proxy for cash flow before financing costs, fell 37% from a year ago to $21.6 million and selling prices are dropping as well.

More from The Motley Fool

I think this looks like a short-term reprieve for Renewable Energy Group, and until we see selling prices rise and the company start reporting a profit, I'll stay out of this stock.

The article Why Renewable Energy Group Inc.'s Shares Jumped 29% in March originally appeared on Fool.com.

Continue Reading Below

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.