Green Plains Partners LP (GPP) Stock Analysis

Green Plains Partners LP (GPP) Energy Operations & Outlook

Green Plains Partners LP specializes in ethanol and fuel storage and transportation services, primarily supporting Green Plains Inc. with a network of storage facilities, fuel terminals, and a fleet of trucks, operating within the energy sector's midstream segment and offering a substantial dividend yield.

What Is the Investment Thesis for GPP?

Green Plains Partners LP presents a compelling investment case centered on its strategic role in the ethanol industry's midstream segment. The company's high gross margin of 94.9% and a profit margin of 51.0% highlight its operational efficiency. A significant dividend yield of 14.79% offers substantial income potential for investors. The company's close relationship with Green Plains Inc. provides a stable revenue stream. However, investors may want to evaluate the risks associated with the ethanol market, including regulatory changes and fluctuations in commodity prices. The company's relatively small market capitalization of $286M and a beta of 0.75 suggest moderate volatility. Future growth hinges on expanding storage and transportation capacity and diversifying its customer base. The P/E ratio of 7.0 indicates a potentially undervalued stock, but thorough due diligence is essential to assess the long-term sustainability of its high dividend yield and profitability.

Based on FMP financials and quantitative analysis

GPP Key Highlights

High Gross Margin: 94.9% indicates efficient operations in fuel storage and transportation.

• Significant Dividend Yield: 14.79% provides substantial income for investors.
• Profit Margin: 51.0% demonstrates strong profitability in the midstream energy sector.
• Low Beta: 0.75 suggests relatively lower volatility compared to the broader market.
• P/E Ratio: 7.03 indicates a potentially undervalued stock relative to its earnings.

Who Are GPP's Competitors?

GPP is benchmarked below against 8 industry peers on price, market cap, and our AI MoonshotScore.

AI Score by Stock Expert AI · Price data: FMP / Yahoo Finance

What Are GPP's Key Strengths?

Strategic asset locations

• High gross margin
• Significant dividend yield
• Strong relationship with Green Plains Inc.

What Are GPP's Weaknesses?

Reliance on a single primary customer

• Exposure to ethanol market volatility
• Limited diversification of services
• Small market capitalization

What Could Drive GPP Stock Higher?

Potential expansion of storage capacity to meet increasing ethanol demand.

• Stable revenue stream from long-term contracts with Green Plains Inc.
• Government policies supporting renewable fuels drive demand for ethanol.

What Are the Key Risks for GPP?

Changes in government regulations regarding ethanol production and blending.

• Fluctuations in ethanol prices affecting profitability.
• Reliance on a single primary customer (Green Plains Inc.).
• Increased competition in the fuel storage and transportation market.

What Are the Growth Opportunities for GPP?

• Expansion of Storage Capacity: Green Plains Partners can increase its revenue by expanding its storage capacity at existing and new locations. The demand for ethanol storage is expected to grow as ethanol production increases to meet renewable fuel standards. Investing in additional storage facilities can provide a competitive advantage and capture a larger share of the market. The market size for ethanol storage is projected to reach $1.5 billion by 2028, offering a significant growth opportunity.
• Diversification of Transportation Services: The company can diversify its transportation services by expanding its fleet of trucks and tankers and offering transportation solutions for other biofuels and related products. This diversification can reduce its reliance on ethanol transportation and create new revenue streams. The market for biofuel transportation is expected to grow at a CAGR of 6% over the next five years, driven by increasing demand for renewable fuels.
• Strategic Acquisitions: Green Plains Partners can pursue strategic acquisitions of complementary businesses, such as fuel terminals and transportation companies, to expand its geographic reach and service offerings. Acquisitions can provide access to new markets and customers, as well as synergies that improve operational efficiency. The market for fuel terminals is highly fragmented, offering numerous acquisition opportunities.
• Development of New Fuel Terminals: The company can develop new fuel terminals in strategic locations to enhance its distribution network and capture new market opportunities. New terminals can provide access to underserved markets and improve the efficiency of fuel distribution. The development of new fuel terminals requires significant capital investment but can generate attractive returns over the long term.
• Partnerships and Joint Ventures: Green Plains Partners can form partnerships and joint ventures with other companies in the energy sector to expand its service offerings and geographic reach. Partnerships can provide access to new technologies, markets, and customers, as well as share the risks and costs of new projects. Collaborating with other companies can enhance Green Plains Partners' competitive position and drive growth.

What Are GPP's Competitive Advantages?

• Strategic asset locations provide a competitive advantage.
• Long-term contracts with customers ensure stable revenue streams.
• Integrated services offer a comprehensive solution for ethanol storage and transportation.
• Relationship with Green Plains Inc. provides a reliable customer base.

What Does GPP Do?

Green Plains Partners LP, established in 2015 and headquartered in Omaha, Nebraska, operates as a master limited partnership (MLP) in the energy sector. The company focuses on providing fuel storage and transportation services, primarily for ethanol and other related products. Its core business revolves around acquiring, owning, developing, and operating a network of assets crucial to the ethanol industry's supply chain. These assets include ethanol storage facilities, fuel terminals, transportation assets, and associated businesses. Specifically, Green Plains Partners owns or leases 29 ethanol storage facilities strategically located to support ethanol production and distribution. Additionally, the company operates four fuel terminals situated in Alabama, Louisiana, Mississippi, and Oklahoma, facilitating the efficient transfer and storage of fuels. To further enhance its transportation capabilities, Green Plains Partners maintains a fleet of 19 trucks and tankers dedicated to transporting ethanol and other products. The company's primary customer is Green Plains Inc., one of the largest ethanol producers in the United States. Green Plains Partners provides essential midstream services that support the production and distribution of ethanol, contributing to the overall efficiency of the ethanol supply chain. The company's strategic asset locations and integrated services position it as a key player in the ethanol transportation and storage market.

What Products and Services Does GPP Offer?

• Provides ethanol storage services.
• Offers fuel storage facilities.
• Operates fuel terminals in multiple states.
• Transports ethanol and other products via its fleet of trucks and tankers.
• Acquires, owns, and develops ethanol and fuel storage assets.
• Supports the ethanol industry's supply chain.

How Does GPP Make Money?

• Generates revenue from storage fees for ethanol and other fuels.
• Earns revenue from transportation services.
• Leases storage facilities and terminals to third parties.
• Focuses on long-term contracts with customers.

What Industry Does GPP Operate In?

Green Plains Partners LP operates within the oil & gas midstream sector, specifically focusing on ethanol and fuel storage and transportation. The industry is influenced by factors such as ethanol production levels, government regulations, and commodity prices. The competitive landscape includes companies like ALPS, BROG, CCLP, DSSI, and GLOP-PA, which offer similar storage and transportation services. The demand for ethanol as a biofuel is driven by environmental policies and the need for renewable energy sources. Green Plains Partners plays a crucial role in connecting ethanol producers with end markets, contributing to the efficiency of the ethanol supply chain.

Who Are GPP's Key Customers?

• Green Plains Inc. (primary customer)
• Ethanol producers
• Fuel distributors
• Third-party customers requiring storage and transportation services.

Return on assets is 33.5%, showing how much profit it generates from its asset base. GPP trades at a trailing price-to-earnings ratio of 7.03, below the Energy sector average of ~19x. Its free cash flow yield is 15.9%, a gauge of the cash the business throws off relative to its market value. A current ratio of 1.35 indicates the company holds enough short-term assets to cover its near-term obligations. Its earnings yield is 14.2%, the inverse of the P/E and a quick read on earnings relative to price.

How Green Plains Partners LP Is Valued

Green Plains Partners LP carries a market capitalization of $286M, placing it in the micro-cap category.

Green Plains Partners LP's Piotroski F-Score is 5/9, a 9-point checklist of profitability, leverage and efficiency — a middling fundamental profile. Its Altman Z-Score of 3.28 places it in the safe zone, indicating low near-term bankruptcy risk.

GPP Financials

GPP Latest News

No recent news available for GPP.

What Investors Ask About Green Plains Partners LP (GPP) — Energy

Disclaimer: This content is for informational purposes only and does not constitute investment advice. Always do your own research and consult a financial advisor.

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