A Valuation Deep Dive as Gevo (GEVO) Shifts Jet Fuel Project from South Dakota to North Dakota

Gevo is pausing its billion-dollar alcohol-to-jet fuel project in Lake Preston, South Dakota and shifting operations to North Dakota after securing approval to amend its federal loan terms. The move reflects both regulatory and economic considerations.

See our latest analysis for Gevo.

Gevo’s recent decision to relocate major project efforts comes after a period of notable share price momentum, with a 79% surge over the past three months and a sharp 20% one-month gain. Despite these strong short-term moves, the total shareholder return over the past year is still down 15%. This shows that confidence is improving from a lower base, but long-term investors have experienced some volatility.

If you’re interested in discovering more dynamic companies on the move, now’s the time to broaden your search and explore fast growing stocks with high insider ownership

With significant short-term gains but a mixed long-term track record, is Gevo’s current price an opportunity for value investors? Alternatively, does the recent momentum indicate that the market has already accounted for its future potential?

Most Popular Narrative: 58% Undervalued

With the latest close at $2.47 and a narrative fair value pegged at $5.92, the consensus narrative signals significant headroom for upside if projections play out as expected. The story hinges on transformative catalysts and bold financial estimates, setting a high bar for future performance.

Monetization and growth of high-integrity carbon dioxide removal (CDR) credits and clean fuel production tax credits (CFPCs), enabled by Gevo's uniquely certified carbon sequestration site, provide new stable, high-margin revenue streams and cost offsets that are expected to meaningfully lift recurring net income and reduce volatility.

Read the complete narrative.

Eager to uncover what's driving this optimistic price target? The secret sauce behind this valuation is not just about new markets, but also surprising shifts in profitability and a daring multiple far above industry tradition. How do analysts justify this aggressive outlook? Click to see the future-focused math and discover which bold assumptions set Gevo apart in the energy sector.

Result: Fair Value of $5.92 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, significant reliance on government funding and policy shifts, along with execution risks as Gevo scales, could challenge the bullish outlook for future growth.

Find out about the key risks to this Gevo narrative.

Another View: A Premium Compared to Peers

Looking at Gevo’s valuation through the lens of its sales ratio tells a different story. The company trades at 7.2x sales, much higher than the US Oil and Gas industry average of 1.5x and even its peer average of 12.3x. Compared to the fair ratio of 0.9x, this premium suggests elevated valuation risk if the business model faces setbacks. Could the market be overestimating Gevo’s potential, or is this premium justified by future upside?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Gevo Narrative

If the consensus outlook does not reflect your perspective or you prefer charting your own analysis, you can shape your own story in just a few minutes with Do it your way.

A great starting point for your Gevo research is our analysis highlighting 1 key reward and 4 important warning signs that could impact your investment decision.

Looking for more investment ideas?

Missing these unique stock opportunities could mean leaving potential returns on the table. Put yourself in a stronger position to act on tomorrow’s trends today. Don't wait and let the market pass you by.

• Tap into early-stage growth by checking out these 3556 penny stocks with strong financials poised for strong financial performance.
• Unlock possibilities in healthcare innovation with these 33 healthcare AI stocks and find those riding the wave of medical AI breakthroughs.
• Catch market mispricings before others by reviewing these 872 undervalued stocks based on cash flows packed with stocks trading below their potential based on cash flows.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com