Attis Industries Inc (NASDAQ: ATIS) released news today that it has executed a letter of intent to purchase a 32-acre property. The property will be used to host the company’s first commercial-scale biorefinery, which is some pretty exciting news. In fact, the news warranted gains of more than 10% early on. While the price has settled a bit, the stock is still in the green and will likely end the day in the positive territory. With all of the excitement, you may be wondering if now is a good time to buy the stock. Here’s how I see it:
What Atttis Industries Does
Attis Industries is a company that’s focused in various sectors. In particular, the company focuses on healthcare, medical waste, and environmental technologies. The company has broken its business into several subsidiaries, including:
- Attis Industries – Attis Industries is a subsidiary of ATIS that is focused on the production of bio-based products. In fact, the news released today that led to the gains was directly related to this subsidiary. We’ll get into that in a moment.
- Attis Healthcare – At Attis Healthcare, the company focuses on molecular pathogen identification, pharmacogenetics, blood and toxicology, medication therapy management and hospital consulting services.
- Bright City – Bright City is a company that helps to solve significant issues in cities. This is done through streamlining communications, expanding security, expediting the flow of information to appropriate departments, reporting emergencies faster and more accuracy and building trust among elected officials, city staff, lawn enforcement and citizens.
- Attis Envicare – Finally, Attis Envicare is a company focused in the medical waste sector.
Digging Into Today’s News
Looking at the ATIS chart today, it’s clear to see that the day has been a positive one thus far. Ultimately, the gains are the result of news surrounding a letter of intent signed by the company. Attis Industries entered into a letter of intent with the city of Barnesville, Georgia, under which it intends to purhase a 32 acre property. The company said that the land will be used as a site for its first commercial biorefinery.
This new biorefinary will have the capacity to generate approximately $35 million in biobased products. If all goes as planned, the facility will be able to process and convert 200 dry tons of biomass per day into bio-based products. These products include pulp used in various paper products, sugars for renewable fuel production, melt-flowable lignin for use in plastics and biobased chemicals that are often found in everyday consumer products.
The letter of intent was welcomed with open arms by David Rose, Barnesville City Manager, and Kathy Oxford, executive director of the Barnesville Lamar County Industrial Development Authority, and for good reason. The new biorefinery, once completed, will generate 40 direct green collar jobs for the local community with plans to increas that to more than 100 jobs within 2 years.
We’ve Talked About The Good, Here’s The Bad And Ugly
Any investment you make is going to come with risk. However, some investments come with higher risks than others. While ATIS does have some serious potential in the long run, there are also some seriours risks to consider. These include:
- Pre-Earnings – Attis Industries has been around since 1993. However, one thing the company hasn’t done was generate a profit. Last year, the company generated a loss of $4.63 per share, and while analysts are expecting that loss to shrink to $1.97 per share this year, a loss is a loss, and ATIS doesn’t look to be generating profits any time soon.
- It Could Be Worse Than Analysts Expect – Over the past four consecutive quarters, ATIS has underperformed with regard to earnings, missing analyst expectations by at least 38% and at most 300%. Considering this, we can expect for the loss per share seen throughout this year to be substantially higher than the $1.97 per share forecast if history is any indication.
- Horrible Margins – Interestingly, analysts are expecting to see incredible growth in revenue this year. With under a million in revenue last year, projections show that the company is going to grow revenue more than sixty-fold to more than $58 million! However, due to the high cost of this revenue, the company is still likely to end the year with substantial losses!
- No Near Term Catalysts – While there may be some small catalystic events, like the signing of the final purchase agreement for the land purchase and breaking ground on the new biorefinery, there are no major near term catalystic events. So, while we may see small spikes in value here and there, the bored investor is likely to send the stock on an overall downtrend, at least in the short term.
Is ATIS A Good Buy At Current Levels?
That really depends on if you’re buying to trade or if you’re buying to hold. The reality is that while today’s news surrounding ATIS was positive, it doesn’t discount the fact that the company is known for generating losses far higher than analysts expect to see. Sure, a new biorefinery is a great thing. What will be better is if that biorefinery helps the company reduce the cost of generating revenue and ultimately work its way toward profit, and that unfortunately is yet to be seen!