Calumet: Stronger Business, Pricier Stock

The analyst pointed to two main risks. Renewable fuel margins are notoriously volatile and depend on government credits like the Renewable Fuel Standard’s D4 RINs. A policy shift or a decline in diesel demand could compress those margins quickly. Calumet also carries significant debt. The company had roughly $700 million in net debt at the end of the first quarter. Higher interest costs from the refinancing of a 2025 note have already added $15 million in annual interest expense, the analyst noted.

The stock’s valuation leaves no cushion. The analyst calculated that the current enterprise value of about $1.5 billion implies a multiple of 8x on his 2025 EBITDA estimate of $185 million. That is in line with the broader specialty chemicals group, which he said “doesn’t leave room for operational misses.”

The analyst’s conclusion was straightforward: the business is stronger than it was two years ago, yet the stock is no longer a bargain. He recommended waiting for a pullback to the low $20s or high teens before initiating a position. The article was published on Seeking Alpha on June 26.