Pacific Ethanol shares have a beta measure near 3.90, indicated a long position in PEIX would be a cheap, but exciting roller coaster ride. This puts a bit of pressure on an investor to pinpoint enterprise value. In 2012, the company lost $20.8 million on $848.8 million in total sales. Indeed, Pacific Ethanol only produced an operating profit in the year 2011 when sales topped $900 million. Sales in the first quarter 2013 recovered and if that pace is maintained the company could deliver another $900 million in total sales for the year 2013. Unfortunately, it looks like management has become a big spender as operating expenses were significantly higher in the quarter, putting into doubt a profit even on $900 million in sales. PEIX shares are trading at 0.20 times assets, most of which are tied up in the ethanol-making plant and equipment. These plants have been proven to have value even in bankruptcy and we think this stock might be undervalued in terms of asset value. |