Green Plains Partners LP (GPP) in Omaha, Neb., acquires, owns, develops, and operates ethanol and fuel storage facilities, terminals, transportation assets, and other associated assets and enterprises. It owns or rents 32 ethanol storage facilities and approximately 49 acres of land.

While GPP’s four-year average dividend yield is 12.1%, its current dividend translates to a 12.3% yield. It paid a $0.44 per share quarterly dividend on February 10. The stock has gained 45.8% in price over the past year and 24% over the past nine months to close yesterday’s trading session at $14.35.

In addition, the company possesses strong profit margins and stable growth prospects, which should further aid its price performance.

Here is what could shape GPP’s performance in the near term:

Industry Tailwinds

Governments worldwide are taking steps to transform their economies into renewable-energy-driven, sustainable models. While several breakthroughs are being made in solar and wind energy–among other renewable energy sources–demand for biofuel is increasing due to its application in the road transportation industry. Biofuels are predicted to reduce reliance on fossil fuels drastically. According to reports, the biofuel market is projected to reach $245.48 billion by 2027, growing at a 7.81% CAGR.

Strong Profitability

GPP’s 50.4% trailing-12-months net income margin is 1992.4% higher than the 2.41% industry average. Also, its ROC, EBITDA margin, and ROA are 710.9%, 209.9%, and 2273.6% higher than the respective industry averages. Furthermore, its 70.6% gross profit margin is 67.1% higher than the 42.3% industry average.

Stable Growth Prospects

The Street expects GPP’s revenue to rise 4.8% year-over-year to $89.49 million in its fiscal 2022. In addition, GPP’s EPS is expected to rise at a 15% CAGR over the next five years.

POWR Ratings Reflect Solid Prospects

GPP has an overall B grade, which equates to a Buy rating in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. GPP has a B grade for Stability and an A for Quality. The stock’s 0.77 beta is in sync with its  Stability grade. In addition, the company’s revenue and EPS growth are consistent with its  Quality grade.

Among the 34 stocks in the A-rated MLPs – Oil & Gas industry, GPP is ranked #6.

Beyond what I stated above, we have graded GPP for Growth, Sentiment, Value, and Momentum. Get all GPP ratings here.

Bottom Line

The company has solid profitability with expected robust revenue growth and a high and stable dividend yield. Furthermore, it is expected to benefit from the growing demand for renewable energy worldwide. So, we believe it could be wise to add the stock to one’s portfolio now.

How Does Green Plains Partners LP (GPP) Stack Up Against its Peers?

GPP has an overall POWR Rating of B, which equates to a Buy rating. Check out these other stocks within the MLPs – Oil & Gas industry with A (Strong Buy) ratings: Global Partners LP (GLP).

GPP shares were trading at $14.55 per share on Monday morning, up $0.20 (+1.39%). Year-to-date, GPP has gained 5.51%, versus a -7.40% rise in the benchmark S&P 500 index during the same period.

About the Author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...

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