ALTO · Alto Ingredients
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $4.32
Note written ·
Price against the kill line
15.3% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $4.32, on record since 11 November 2026. The shares are down 13.3% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $4.32, the 200-day average of adjusted closes on 11 November 2026, which would show the shares leading the S&P 500 and the lag call wrong.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Materials
Quarter to 30 September 2026, filed 6 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 258
- Revenue, change on a year (%)
- +7.0
- Gross margin (%)
- 5.7
- Operating margin (%)
- 2.7
- Free cash flow, four quarters ($M)
- 37.3
- Net cash, cash less debt ($M)
- −34.5
- Price to earnings (×)
- 5.6
- Enterprise value to sales (×)
- 0.3
All filed numbers
What Alto Ingredients reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 258 | +7.0 | 5.7 | 2.7 |
| first filed | 246 | +12.5 | 6.8 | 3.5 |
| first filed | 225 | −0.8 | 4.1 | 1.1 |
| first filed | 232 | −1.9 | 6.5 | 3.2 |
| first filed | 241 | −4.3 | 9.7 | 7.0 |
| first filed | 218 | −7.6 | −0.9 | −3.7 |
| Pre-tax income ($M) | 13.0 |
| Net income ($M) four quarters: 50.8 | 13.0 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +3.8 |
| Operating cash flow ($M) | 55.1 |
| Capital spending ($M) | 17.8 |
| Free cash flow ($M) | 37.3 |
| Cash and short-term investments ($M) | 23.6 |
| Debt ($M) long-term debt | 58.1 |
| Net cash, cash less debt ($M) | −34.5 |
| Deferred revenue ($M) | Not reported |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 64.3 |
| Inventory ($M) | 54.3 |
| Shareholders' equity ($M) | 274 |
| Market value ($M) | 284 |
| Enterprise value, market value plus net debt ($M) | 318 |
| Enterprise value to sales (×) | 0.3 |
| Enterprise value to operating income (×) | 12.4 |
| Price to earnings (×) | 5.6 |
| Price to book value (×) | 1.0 |
| Free-cash-flow yield (%) | 13.1 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 7.2% of shares outstanding sold short, 5.8 days of average trading to cover, −5.8% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $39K | $0 |
| 12 monthsfrom | $361K | $0 |
The thesis
Alto Ingredients is more likely to lag the S&P 500 over the next three months. Its pivot from commodity ethanol to low-carbon and specialty products still produces reported profit, but core gross profit is shrinking and clean-fuel credits fill more of the gap. Gross profit was $14.8 million in the quarter ended 30 September 2026, against $23.5 million a year earlier (company 8-K, 4 November 2026). The fourth-quarter report decides whether Pekin Campus margins recover.
The shares closed at $3.84 on 11 November 2026, 37.2% below the 52-week intraday high of $6.11 set on 1 July 2026. The market has already taken the shares well below that July high, and the 3-month change is −8.6%. Alto's 10-Q, filed 6 November 2026, shows 77,570,731 common shares outstanding on 5 November 2026, so the stock-sale agreement has not visibly raised the share count since the Q1 10-Q reported 77,946 thousand at 31 March 2026.
Bullish and bearish views on Alto Ingredients, Inc.
The bull case on Alto Ingredients, Inc. (ALTO), in brief: headline results beat estimates. The bear case: core gross profit fell sharply.
Bull case
- Headline results beat estimates. Third-quarter earnings were $0.16 per diluted share against a $0.14 estimate, and sales were $257.885 million against $250.967 million, per a company-news headline on 4 November 2026. Net income was $13.0 million before preferred dividends and $12.7 million to common holders, per the 8-K.
- Clean-fuel credits are growing. Section 45Z credits (a federal tax credit for low-carbon fuel production) generated $7.6 million net in the third quarter and $16.6 million year to date. Management expects at least $20 million for 2026, net of monetization costs (8-K, 4 November 2026).
- The balance sheet is stronger. Net long-term debt was $54.5 million with no current portion at 30 September 2026, against $63.0 million long-term plus $16.6 million current at 31 December 2025. Cash was $23.6 million and borrowing availability $108 million (8-K, 4 November 2026). On 28 October 2026 Alto extended its Kinergy line of credit maturity to 9 August 2028 (10-Q).
- A director bought shares. Nathan Gilbert E, a director, made an open-market purchase of 10,000 shares at $3.93 on 14 September 2026 (SEC Form 4). It is the only insider transaction in recent SEC filings.
Bear case
- Core gross profit fell sharply. Pekin Campus production gross profit was $9.5 million against $18.9 million a year earlier, and income from operations was $7.0 million against $17.0 million (8-K, 4 November 2026). Western production improved to $2.6 million from $1.5 million.
- Credits now sit beside a thinner core. The 8-K reports $7.6 million of net 45Z credits in a quarter with $7.0 million of operating income. Section 45Z credits are legislated to expire after 2029, so that share of earnings has a fixed life.
- Adjusted earnings did not grow. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, adjusted) was $21.0 million against $21.4 million a year earlier, and EPS fell to $0.16 from $0.19 (8-K, 4 November 2026).
- Share supply remains authorized. Alto signed a $50 million at-the-market sales agreement on 5 August 2026 that lets management issue stock at its discretion. Any use would appear in later filings, and a rally would be the natural moment for it.
- Corn costs are a headwind. Corn is Alto's main input. USDA's September 2026 WASDE (World Agricultural Supply and Demand Estimates) forecast a 2026/27 farm price of $4.80 per bushel, and each monthly revision resets that cost view.
Price setup
The shares closed at $3.50 on 4 November 2026, the day of the third-quarter report. They rose in each of the next four sessions to $3.84 on 10 November 2026, then closed unchanged on 11 November 2026. The 3-month reference close was $4.20 on 13 August 2026.
The close sits above the 50-day average of adjusted closes, $3.76 as of 11 November 2026, and below the 200-day average of adjusted closes. That is a rebound inside a longer decline from the July high. The 52-week closing low was $1.78 on 11 November 2025, so the shares remain far above their level of a year ago.
The overhang is the at-the-market agreement, which could add shares into a rally. Alto's Russell 2000 and 3000 inclusion since the 26 June 2026 close makes index flows a two-way factor.
Catalysts ahead
- 18 November 2026: Weekly EIA ethanol production and stocks report. Ethanol output and inventory figures move ethanol prices and the shares without company news.
- ~10 December 2026 (est.): USDA December WASDE report (World Agricultural Supply and Demand Estimates). A higher 2026/27 corn farm-price forecast raises Alto's main input cost and pressures crush margins.
What would change the view
A daily close above $4.32, the 200-day average of adjusted closes on 11 November 2026, which would show the shares leading the S&P 500 and the lag call wrong.
What it trades with
Alto trades with US ethanol crush margins, corn prices and federal and California low-carbon fuel policy. The year-round E15 (15% ethanol blend) outlook in California, cited by management on 4 November 2026, is a demand factor shared with other ethanol producers. Small-cap indexes matter through the Russell 2000 inclusion.
The evidence, claim by claim (8)
- Q3 2026 net sales $257.9M (vs $241.0M), gross profit $14.8M (vs $23.5M), income from operations $7.0M (vs $17.0M). Alto Ingredients 8-K, Q3 2026 results · as of
- Q3 2026 net income attributable to common $12.7M, $0.16 per diluted share (vs $0.19); adjusted EBITDA $21.0M (vs $21.4M). Alto Ingredients 8-K, Q3 2026 results · as of
- Pekin Campus production gross profit $9.5M vs $18.9M a year earlier; Western production $2.6M vs $1.5M. Alto Ingredients 8-K, Q3 2026 results · as of
- Net 45Z credits $7.6M in Q3 and $16.6M year to date; management expects at least $20M for 2026. Alto Ingredients 8-K, Q3 2026 results · as of
- Cash $23.6M, long-term debt net $54.5M with no current portion, borrowing availability $108M at quarter end. Alto Ingredients 8-K, Q3 2026 results · as of
- Q3 EPS $0.16 beat the $0.14 estimate; sales $257.885M beat the $250.967M estimate. Company news headline, 4 November 2026 · as of
- Director Nathan Gilbert E made an open-market purchase of 10,000 shares at $3.93. SEC Form 4 · as of
- 77,570,731 common shares outstanding on the cover page; Kinergy line of credit maturity extended to 9 August 2028 on 28 October 2026. Alto Ingredients Form 10-Q, quarter ended 30 September 2026 · as of
Sources
- Alto Ingredients, Inc. - Form 8-K - FY2026 · sec.gov ·
- SEC EDGAR
Related · shared themes