Pacific Ethanol Making the Best of a Bad Situation

After bashing ethanol in general, we need to give credit where it's due, namely to Pacific Ethanol which beat analysts's expectations by $0.15 a share for the first quarter, on huge volume.

Wall Street was expecting a loss of $.09 per share and Pacific turned in an EPS of $0.06. According to the write-up in the Sacramento Bee:

"The company made it up on volume. Pacific Ethanol has been trying to achieve a significant marketing position throughout the West, and it seems to be working. Sales hit a record $161.5 million in the first quarter, up 63 percent from a year earlier and slightly better than expected by analysts."

Pacific was refreshingly candid in its filing, admitting to an "overall softening" of the ethanol industry, as it took a $38 million write-down on an investment in an ethanol plant in Colorado. But, while ethanol on the whole might be a boondoggle, that's not to say that owning a significant part of the market can't be profitable-- clearly it can.

But Pacific has had its share of problems, as the Bee notes:

"Pacific Ethanol has been hit with a slew of problems lately, notably cost overruns on its plant construction projects. The company was so squeezed for cash that it had to sell $40 million in preferred shares earlier so squeezed for cash that it had to sell $40 million in preferred shares earlier this year."

Pacific Ethanol's booming sales delight Wall Street [Sacramento Bee]