Connect with us

Economics

Vertex Energy Stock: New Refinery Boosts Earnings Outlook

Is it too late to buy with Vertex Energy stock already up 200% this year? Read on to learn more about what you can expect from VRTN stock.
The post Vertex…

Published

on

Vertex Energy (Nasdaq: VTNR) is one of the biggest winners of 2022, up almost 200%. Though Vertex Energy stock has been rallying since February, share prices accelerated since its Q1 earnings.

Also, the highly-anticipated acquisition of Shell’s (NYSE: SHEL) Alabama refinery is adding fuel to the fire. That said, the news is significant as energy prices hit record highs.

Refineries are in high demand as they look to fill the supply gap left by Russian oil bans. Furthermore, oil companies are generating record cash flow as commodity prices soar. With this in mind, Vertex expects the deal to add significant value over the next few years.

Is it too late to buy with Vertex Energy stock already up 200% this year? Read on to learn more about Vertex and what you can expect from VRTN stock.

What Does Vertex Energy Do?

As you may have guessed, Vertex is in the energy industry. Yet the company is unique from most oil and gas company. The company focuses on energy transition.

To clarify, Vertex recycles motor oil and other petroleum by-products. In fact, the company handles all aspects of the value chain, from transporting and selling. With this in mind, Vertex does business in three areas.

  1. Black Oil
  2. Refining & Marketing
  3. Recovery

Black oil, also known as used oil, is refined to make other products like fuel blends. Since Vertex Energy stock has extensive industry relationships, they get black oil at a relatively low cost.

The refining and marketing unit makes three products. Gasoline blend stock, feedstock, and fuel oil cutter stock. Moreover, Vertex uses a licensed tech to convert the black oil into diesel replacement. With this in mind, the tech produces higher-value products.

Lastly, the recovery business is a generator solutions company. In other words, it helps recycle and manage used oil, crude blends, vegetable oil and grease, etc. After a few acquisitions the past few years, Vertex is better positioned to take advantage of the higher energy prices.

Why Vertex Energy Stock is up Over 200% This Year

Vertex Energy is one of many energy companies rallying this year. In fact, the Energy Select Sector SPDR Fund (NYSE: XLE) is up 49% this year compared to the S&P 500 Index (SPX), down 20% YTD.

But after acquiring Shell’s refinery business in Al, Vertex is uniquely positioned to take advantage of higher commodity prices. The deal adds 91,000 barrels per day capacity.

Furthermore, the refinery is on the oil-rich U.S. Gulf coast, a prime location for processing. So far, distillate, gasoline, and jet fuel make up about 70% of annual production. The services are in high demand now as energy prices lead to 40-year high inflation.

The improving economics around the oil and gas industry gives the deal significant potential. CEO Benjamin Cowart calls it a “transformative moment in the history of Vertex.”

A major part of the transformation comes as the deal allows Vertex Energy stock to produce renewable diesel fuel. According to information from the International Energy Agency (IEA), renewable diesel demand expects to triple in the next four years.

The research points to favorable policy changes in the U.S. and Europe that will likely accelerate demand in the next few years. Although the refinery does not have the ability yet, Vertex expects to produce renewable fuels by next year.

Lastly, Vertex Energy stock has higher short interest, which can cause rapid price gains in some situations. If a positive catalyst causes shorts to cover their positions, it can cause shares to rally even more.

Can Vertex Keep the Momentum Going?

Industry leaders expect energy prices to remain elevated for some time. The supply gap left by Russian oil bans will take time to fill. For example, this week’s U.S. Gasoline Update shows refinery capacity utilization of around 94.3%.

In comparison, the rate is up 5.8% from last year’s rate of 88.5%. Though there is still some capacity to fill, it doesn’t leave much room to expand. And expanding supply can take years in many instances.

Cowart says, “Entering 2023, we intend to layer on the financial benefit of renewable diesel fuel production. Which, given current commodity prices and credit values, will position us to deliver significant value to our shareholders.”

Looking at Vertex Energy stock, you can see the rally accelerate after posting first-quarter earnings. Part of the reason for the rally is the raised guidance from the Shell deal.

  • 2023 Gross Profit: $470-490 million.
  • 2023 Free Cash Flow: $250-270 million.

At the same time, to fund the project, the company expects to spend between $90-$100 million. The project will add debt to an already overinflated balance sheet.

Net debt in the first quarter totaled $21.2 million. The debt is sustainable for now, with higher commodity prices driving margins up. But, if margins start to slip, the higher debt levels may be a concern.

Vertex Energy Stock Forecast: Does VTNR Have More Room to Rally?

The stock market is currently selling off with no safe sectors. Even energy stocks are selling off after outperforming the market this year.

With this in mind, the energy demand is not slowing. In the next few years, experts expect to see higher renewable fuel demand. In fact, demand for biofuel is already well past pre-pandemic levels.

The transition will boost sales next year, especially as commodity prices remain high. But, the cost to fund the project may be a concern if growth slows. To reduce the impact of falling energy prices, Vertex is hedging 50% of the planned refinery production. The move will protect downside risk while boosting profits this year.

There’s a common saying in the stock market, “don’t fight the trend.” And until proven otherwise, energy remains the clear leader. After rallying over 200% this year, investors will be paying a premium. But as the company ups production and sees profits from the new refinery, Vertex Energy stock can benefit.

After Q1 earnings, VTNR stock was the talk on Wall St. Credit Suisse and Stifel both increased their price targets while maintaining a buy (outperform) rating. Don’t be surprised to see another shake-out before years end. But come 2023, Vertex’s clean energy business should be ready to roll.

The post Vertex Energy Stock: New Refinery Boosts Earnings Outlook appeared first on Investment U.

Read More

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Economics

One Year Ahead Inflation Expectations for July (and Forward 2-3 Year) Drop

The NY Fed measure of inflation expectations dropped dramatically from 6.8% in June to 6.2% in July. This is a much larger drop than the Michigan series…

Published

on

The NY Fed measure of inflation expectations dropped dramatically from 6.8% in June to 6.2% in July. This is a much larger drop than the Michigan series (0.1ppt).

Figure 1: CPI inflation year-on-year (black), median expected from Survey of Professional Forecasters (blue +), median expected from Michigan Survey of Consumers (red), median from NY Fed Survey of Consumer Expectations (light green), forecast from Cleveland Fed (pink), mean from Coibion-Gorodnichenko firm expectations survey [light blue squares]. Michigan July observation is preliminary. Source: BLS, University of Michigan via FRED and iPhiladelphia Fed Survey of Professional ForecastersNY FedCleveland Fed and Coibion and Gorodnichenko

Not only did the median one year expected drop, so too did the implied 12 month inflation rates for 2-3 years out.

Figure 2: One year median from NY Fed Survey of Consumer Expectations as of indicated date (blue ), implied 12 month growth rates for 2-3 years out (tan). Source: NY Fed, and author’s calculations.

Notice that the longer term expected rate 2-3 years out is back to (and less) than where it was pre-pandemic. This is consistent with the five year inflation breakevens (unadjusted and adjusted) reported in yesterday’s post.

Figure 3:  Five year inflation breakeven calculated as five year Treasury yield minus five year TIPS yield (blue, left scale), five year breakeven adjusted by inflation risk premium and liquidity premium per DKW (red, left scale), both in %. Light blue dashed line at 2.5% CPI inflation, consistent with 2% PCE inflation. NBER defined recession dates shaded gray. Source: FRB via FRED, Treasury, NBER, KWW following D’amico, Kim and Wei (DKW) accessed 8/4, and author’s calculations.

Read More

Continue Reading

Spread & Containment

Sex work is real work: Global COVID-19 recovery needs to include sex workers

Societally, we need to recognize that sex workers have agency and deserve the same respect, dignity and aid as any other person selling their labour.

Published

on

Globally, sex workers have been left to fend for themselves during the pandemic with little to no support from the government. (AP Photo/Bikas Das)

During the pandemic, business shifted from in person to work-from-home, which quickly became the new normal. However, it left many workers high and dry, especially those with less “socially acceptable” occupations.

The pandemic has adversely impacted sex workers globally and substantially increased the precariousness of their profession. And public health measures put in place made it almost impossible for sex workers to provide any in-person service.

Although many people depend on sex work for survival, its criminalization and policing stigmatizes sex workers.

Research shows that globally, sex workers have been left behind and in most cases excluded from government economic support initiatives and social policies. There needs to be an intersectional approach to global COVID-19 recovery that considers everyone’s lived realities. We propose policy recommendations that treat sex work as decent work and that centre around the lived experiences and rights of those in the profession.

Sex work and the pandemic

The United Nations Population Fund (UNFPA) recently reported that apart from income-loss, the pandemic has increased pre-existing inequalities for sex workers.

In a survey conducted in Eastern and Southern Africa, the UNFPA found that during the pandemic, 49 per cent of sex workers experienced police violence (including sexual violence) while 36 per cent reported arbitrary arrests. The same survey reported that more than 50 per cent of respondents experienced food and housing crises.

Lockdowns and border closures adversely impacted Thailand’s tourism industry which relies partially on the labour of sex workers.


Read more: Sex workers are criminalized and left without government support during the coronavirus pandemic


In the Asia Pacific, sex workers reported having limited access to contraceptives and lubricants along with reduced access to harm reduction resources. Lockdowns also disrupted STI or HIV testing services, limiting sex workers’ access to necessary healthcare.

In North America, sex workers have been excluded from the government’s recovery response. And many began offering online services to sustain themselves.

A woman stands backlit next to a dimly lit bus that reads 'Thailand' with green lighting.
Sex workers stand in a largely shut-down red light area in Bangkok, Thailand on March 26, 2020. (AP Photo/Gemunu Amarasinghe)

Government vs. community response

Globally, sex workers have been left to fend for themselves during the pandemic with little to no support from the government. But communities themselves have been rallying.

Elene Lam, founder of Butterfly, an Asian migrant sex organization in Canada, talks about the resilience of sex wokers during the pandemic.

She says organizations like the Canadian Alliance for Sex Work Law Reform are working in collaboration with Amnesty International to mobilize income support and resources to help sex workers in Canada.

Organizations in the United Kingdom, Germany, India and Spain have also set up emergency support funds. And some sex worker organizations have developed community-specific resources for providing services both in person and online during the pandemic.

Global recovery needs to include sex workers

The International Labour Organization’s “Decent Work Agenda” emphasizes productive employment and decent working conditions as being the driving force behind poverty reduction.

Sociologist Cecilia Benoit explains that sex work often becomes a “livelihood strategy” in the face of income and employment instability. She says that like other personal service workers, sex workers also should be able to practice without any interference or violence.

In order to have an inclusive COVID-19 recovery for all, governments need to work to extend social guarantees to sex workers — so far they haven’t.

As pandemic restrictions disappear, it is crucial to ensure that everyone involved in sex work is protected under the law and has access to accountability measures.

A woman stands wearing a mask with a safety vest on in front of a collage of scantily clad women and a sign that reads 'nude women non stop'
A volunteer helps out at Zanzibar strip club during a low-barrier vaccination clinic for sex workers in Toronto in June 2021. THE CANADIAN PRESS/Frank Gunn

Recommendations

As feminist researchers, we propose that sex work be brought under the broader agenda of decent work so that the people offering services are protected.

  1. Governments need to have a legal mandate for preventing sexual exploitation.

  2. Law enforcement staff need to be trained in better responding to the needs of sex workers. To intervene in and address situations of abuse or violence is critical to ensure workplace safety and harm reduction.

  3. Awareness and educational campaigns need to focus on destigmatizing sex work.

  4. Policy-makers need to incorporate intersectionality as a working principle in identifying and responding to the different axes of oppression and marginalization impacting LGBTQ+ and racialized sex workers.

  5. Engagement with sex workers and human rights organizations need to happen when designing aid support to ensure that an inclusive pathway for recovery is created.

  6. Globally, there needs to be a steady commitment towards destigmatizing sex workers and their services.

Despite the gradual waning of pandemic restrictions, sex workers continue to face the dual insecurity of social discrimination and loss of income support. Many are still finding it difficult to stay afloat and sustain themselves.

Societally, we need to recognize that sex workers have agency and deserve the same respect, dignity and aid as any other person selling their labour.

The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

Read More

Continue Reading

Government

OU researchers award two NSF pandemic prediction and prevention projects

Two groups of researchers at the University of Oklahoma have each received nearly $1 million grants from the National Science Foundation as part of its…

Published

on

Two groups of researchers at the University of Oklahoma have each received nearly $1 million grants from the National Science Foundation as part of its Predictive Intelligence for Pandemic Prevention initiative, which focuses on fundamental research and capabilities needed to tackle grand challenges in infectious disease pandemics through prediction and prevention.

Credit: Photo provided by the University of Oklahoma.

Two groups of researchers at the University of Oklahoma have each received nearly $1 million grants from the National Science Foundation as part of its Predictive Intelligence for Pandemic Prevention initiative, which focuses on fundamental research and capabilities needed to tackle grand challenges in infectious disease pandemics through prediction and prevention.

To date, researchers from 20 institutions nationwide were selected to receive an NSF PIPP Award. OU is the only university to receive two grants to the same institution.

“The next pandemic isn’t a question of ‘if,’ but ‘when,’” said OU Vice President for Research and Partnerships Tomás Díaz de la Rubia. “Research at the University of Oklahoma is going to help society be better prepared and responsive to future health challenges.”

Next-Generation Surveillance

David Ebert, Ph.D., professor of computer science and electrical and computer engineering in the Gallogly College of Engineering, is the principal investigator on one of the projects, which explores new ways of sharing, integrating and analyzing data using new and traditional data sources. Ebert is also the director of the Data Institute for Societal Challenges at OU, which applies OU expertise in data science, artificial intelligence, machine learning and data-enabled research to solving societal challenges.

While emerging pathogens can circulate among wild or domestic animals before crossing over to humans, the delayed response to the COVID-19 pandemic has highlighted the need for new early detection methods, more effective data management, and integration and information sharing between officials in both public and animal health.

Ebert’s team, composed of experts in data science, computer engineering, public health, veterinary sciences, microbiology and other areas, will look to examine data from multiple sources, such as veterinarians, agriculture, wastewater, health departments, and outpatient and inpatient clinics, to potentially build algorithms to detect the spread of signals from one source to another. The team will develop a comprehensive animal and public health surveillance, planning and response roadmap that can be tailored to the unique needs of communities.

“Integrating and developing new sources of data with existing data sources combined with new tools for detection, localization and response planning using a One Health approach could enable local and state public health partners to respond more quickly and effectively to reduce illness and death,” Ebert said. “This planning grant will develop proof-of-concept techniques and systems in partnership with local, state and regional public health officials and create a multistate partner network and design for a center to prevent the next pandemic.”

The Centers for Disease Control and Prevention describes One Health as an approach that bridges the interconnections between people, animals, plants and their shared environment to achieve optimal health outcomes.

Co-principal investigators on the project include Michael Wimberly, Ph.D., professor in the College of Atmospheric and Geographic Sciences; Jason Vogel, Ph.D., director of the Oklahoma Water Survey and professor in the Gallogly College of Engineering School of Civil Engineering and Environmental Science; Thirumalai Venkatesan, director of the Center for Quantum Research and Technology in the Dodge Family College of Arts and Sciences; and Aaron Wendelboe, Ph.D., professor in the Hudson College of Public Health at the OU Health Sciences Center.

Predicting and Preventing the Next Avian Influenza Pandemic

Several countries have experienced deadly outbreaks of avian influenza, commonly known as bird flu, that have resulted in the loss of billions of poultry, thousands of wild waterfowl and hundreds of humans. Researchers at the University of Oklahoma are taking a unique approach to predicting and preventing the next avian influenza pandemic.

Xiangming Xiao, Ph.D., professor in the Department of Microbiology and Plant Biology and director of the Center for Earth Observation and Modeling in the Dodge Family College of Arts and Sciences, is leading a project to assemble a multi-institutional team that will explore pathways for establishing an International Center for Avian Influenza Pandemic Prediction and Prevention.

The goal of the project is to incorporate and understand the status and major challenges of data, models and decision support tools for preventing pandemics. Researchers hope to identify future possible research and pathways that will help to strengthen and improve the capability and capacity to predict and prevent avian influenza pandemics.

“This grant is a milestone in our long-term effort for interdisciplinary and convergent research in the areas of One Health (human-animal-environment health) and big data science,” Xiao said. “This is an international project with geographical coverage from North America, Europe and Asia; thus, it will enable OU faculty and students to develop greater ability, capability, capacity and leaderships in prediction and prevention of global avian influenza pandemic.”

Other researchers on Xiao’s project include co-principal investigators A. Townsend Peterson, Ph.D., professor at the University of Kansas; Diann Prosser, Ph.D., research wildlife ecologist for the U.S. Geological Survey; and Richard Webby, Ph.D., director of the World Health Organization Collaborating Centre for Studies on the Ecology of Influenza in Animals and Birds with St. Jude Children’s Research Hospital. Wayne Marcus Getz, professor at the University of California, Berkeley, is also assisting on the project.

The National Science Foundation grant for Ebert’s research is set to end Jan. 31, 2024, while Xiao’s grant will end Dec. 31, 2023.


Read More

Continue Reading

Trending