Alto Ingredients Faces Sales Pressure: Is a Turnaround in the Cards?

Alto Ingredients ALTO has experienced a sustained decline in sales over the past several years, primarily due to lower average sales prices per gallon and reduced volumes of essential ingredients sold. Weak oil and gasoline prices have put pressure on ethanol pricing, while lower alcohol production and reduced corn prices have led to fewer tons of essential ingredients being marketed. 

As a commodity-linked business, ALTO’s revenues remain highly sensitive to ethanol price movements, corn input costs and demand from fuel blenders and industrial end markets. Sales declines have been evident across all major segments, including the Pekin Campus, Marketing and Distribution, and Western Production operations.

Alto has idled or exited underperforming facilities and low-margin contracts to preserve liquidity and stabilize profitability, resulting in revenue contraction.

Despite ongoing top-line pressure, Alto’s turnaround strategy is encouraging. It has expanded beyond commodity ethanol into higher-value specialty alcohols and essential ingredients serving pharmaceutical, personal care, food, and industrial markets. This is intended to reduce earnings volatility and lessen dependence on fuel ethanol pricing. Alto is expanding carbon dioxide capture and utilization at its Pekin and Columbia facilities, building on the Carbonic acquisition. Monetizing fermentation-derived CO2 provides an incremental, higher-margin revenue stream aligned with sustainability initiatives.

Alto continues to streamline its cost structure, exit unprofitable activities and prioritize capital investments with near-term visibility. Although sales are expected to decline in 2025, a turnaround is expected this year.

What About Its Peers?

Green Plains Inc. GPRE has experienced uneven sales due to fluctuating ethanol prices, shifting fuel demand and commodity volatility. Green Plains is reshaping its business mix toward higher-margin protein and renewable ingredients, which has weighed on short-term sales but is expected to improve stability. Green Plains aims to reduce exposure to ethanol cyclicality through diversification.

Gevo, Inc. GEVO continues to generate modest sales as it advances renewable fuel and sustainable aviation fuel projects. Gevo’s revenues remain limited by development timelines and delayed offtake ramp-ups, reflecting its early-stage model. Nonetheless, Gevo expects sales growth as projects reach commercialization.

ALTO’s Price Performance

Alto Ingredients has gained 45.4% in a year, outperforming the industry, sector as well as the Zacks S&P 500 composite.

ALTO’s Expensive Valuation

The stock is overvalued compared with its industry. It is currently trading at a price-to-earnings multiple of 16.63, higher than the industry average of 15.95.  

No Estimate Movement for ALTO

The Zacks Consensus Estimate for ALTO’s fourth-quarter 2025 EPS witnessed no movement in the last 30 days. The consensus estimates for 2025 and 2026 earnings also witnessed no movement in the last 30 days.
 

The consensus estimate for ALTO’s 2025 revenues indicates a year-over-year decrease, while that for 2026 indicates a year-over-year increase.  The consensus estimates for ALTO’s 2025 and 2026 EPS suggest year-over-year increases. 

ALTO stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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