Alternative fuels have been all the rage in recent years, and Solazyme seeks to produce sustainable biofuel and premium oils with its innovative algae-based technology. But some question whether the company can live up to the hype. Let’s take an early look at what’s been happening with Solazyme over the past quarter and what we’re likely to see in its quarterly report on Wednesday.
Stats on Solazyme
| Analyst EPS Estimate | ($0.37) |
| Year-Ago EPS | ($0.26) |
| Revenue Estimate | $9.28 million |
| Change From Year-Ago Revenue | (38%) |
| Earnings Beats in Past 4 Quarters | 2 |
Source: Yahoo! Finance.
Will Solazyme get more energetic this quarter?
Analysts haven’t changed their views on Solazyme much in the past three months, keeping current-quarter estimates steady. Yet even with losses as far out as analysts care to project, the stock has performed well recently, climbing almost 14% since mid-November.
The big news for Solazyme this quarter came back in November, when the company announced two major partnerships. On the alternative-energy front, Solazyme signed a joint venture agreement with Bunge Ltd (NYSE:BG), Solazyme could boost annual production to between 300,000 and 400,000 metric tons by 2016. Morever, Archer Daniels Midland Company (NYSE:ADM) signed up to collaborate with Solazyme on producing algal oils for the consumer market.
But at this point, it’s far too early to be confident in Solazyme’s long-term prospects. With minuscule sales, Solazyme is counting on a fast ramp-up in growth to justify its share price, but capacity expansion won’t come online for several years. In that time, changing market conditions could sap much of the potential from the industry. Moreover, if competitor Amyris Inc (NASDAQ:AMRS) finds success from its sugar-based jet fuel, or if Rentech, Inc. (NYSEMKT:RTK) succeeds with its biomass projects, Solazyme could find its algae-based model falling out of favor.
In its report, Solazyme needs to establish not just promising prospects but a firm path to growth. As long as it can’t put bottom-line profits where its mouth is, Solazyme will probably continue to struggle.
The article Solazyme Earnings: An Early Look originally appeared on Fool.com and is written by Dan Caplinger.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool owns shares of Solazyme.
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