Is the Pekin Segment the Anchor of Alto Ingredients' Growth Strategy?

The Pekin production segment is a cornerstone of Alto Ingredients’ ALTO investment thesis and a key driver of its earnings power, diversification and long-term strategic positioning. This segment includes the production and sale of alcohols and essential ingredients produced at three production facilities located in Pekin, IL.

Pekin is Alto’s largest and most sophisticated production site, featuring integrated operations that go well beyond conventional fuel ethanol. Its capabilities span higher-margin industrial alcohols, essential ingredients and multiple co-products, creating a more diversified revenue base. This broader mix strengthens revenue consistency and supports margin durability compared with ethanol-focused peers. In 2024, the Pekin Campus segment generated $416 million from alcohol sales and $169 million from essential ingredients. During the year, it sold roughly 214 million gallons of alcohol and 906,300 tons of essential ingredients on a dry matter basis. 

Pekin’s strategic value is driven largely by its access to premium alcohol markets. Unlike fuel ethanol, which is heavily influenced by corn costs, energy pricing and shifting regulations, specialty alcohols and ingredients serve end markets with steadier demand.

Also, Pekin supports Alto’s long-term strategic shift toward higher-value and lower-carbon products. Alto Ingredients is also expanding carbon dioxide capture and utilization at its Pekin and Columbia facilities, building on the Carbonic acquisition. By monetizing fermentation-derived carbon dioxide, the company is adding a higher-margin revenue stream that supports sustainability goals and further diversifies earnings.

What About Its Peers?

Green Plains Inc. GPRE experiences 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 65% in a year, outperforming the industry.

ALTO’s Expensive Valuation

The stock is overvalued compared with its industry. It is currently trading at a price-to-earnings multiple of 17.94, higher than the industry average of 16.89.  

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 2026 revenues and earnings indicates a year-over-year increase.  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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