ALTO - Alto Ingredients' Market Price Has Overtaken Its Transformation Plans

2024-07-11 11:31:56 ET

Summary

• ALTO pivoted its business direction in 2020 to focus on specialty alcohols and essential ingredients for better efficiencies and returns.
• The company's historical performance, peer comparison, and financial position show that it is not a wonderful company.
• The market is pricing ALTO as if there will be an immediate 10% improvement in revenue, contribution margin, and capital efficiency, which is unlikely.

Investment Thesis

In 2020, Alto Ingredients, Inc. ( ALTO ) pivoted its business direction and expanded from only being a low-carbon renewable fuels company to a renewal fuel, specialty alcohols, and essential ingredients one. This was meant to lead to better efficiencies, higher margins, and better returns....

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