Source : investing, 07/10/2024, Monday
On Monday, Citi revised its outlook for Darling Ingredients (NYSE:DAR).
lowering its price target to $46.00 from the previous figure of $48.00.
yet the company retained a “buy” rating for the stock. The adjustment comes ahead of the company’s expected third-quarter earnings report, scheduled for Thursday, October 24..
Darling Ingredients will report earnings for the third quarter of 2024 soon, and early indications suggest the numbers may not align with current market expectations. Analysts predict that earnings before interest, tax, depreciation and amortization (EBITDA) for the third quarter may fall short of the consensus compiled by Visible Alpha.
In addition to the possibility of missing the expected earnings.
the company is also expected to revise its 2024 EBITDA forecast downward. The current forecast is $1.3-1.4 billion, but the analyst expects the actual figure to be less than $1.2 billion. This expected reduction in forecasts may affect the performance of the company’s stock.
Although the prospect of a downward revision, which may not come as a surprise to investors, there is a possibility that the magnitude of the decline may still exert downward pressure on equities The analyst indicates that this could be a liquidation event.
which could affect the trajectory of the stock after the announcement.
In other recent news, Darling Ingredients reported a strong second quarter with earnings before interest, tax, depreciation and amortization of $274 million, net income of $78.9 million, and total sales of $1.5 billion.
The company’s joint venture, Diamond Green Diesel (DGD), has been awarded a contract to supply sustainable aviation fuel to John F. Kennedy International Airport, in line with plans to upgrade nearly half of its annual capacity of 470 million gallons to sustainable aviation fuel by 2024..
In leadership developments, Darling Ingredients has appointed Randy Hill as an independent member of its Board of Directors.
strengthening its global financial analysis and reporting capabilities. At the same time, board member Michael E. Risco, signaling the end of his significant contributions to the company’s growth and global expansion.
Investment firm Baird maintained a positive outlook towards Darling Ingredients, confirming the “Superior Performance” rating. Despite mixed commodity market conditions, Baird’s analysis points to an expected increase in low-carbon fuel standard (LCFS) credits and expectations of a weaker third quarter for DGD.
TD Cowen revised the company’s stock target to $43.00, maintaining its “hold” rating. Analyst valuations take into account possible legislative changes, commodity price fluctuations, and the company’s future earnings forecast.
InvestingPro Insights
Recent data from InvestingPro sheds more light on Darling Ingredients’ financial position.The company’s market capitalization is $5.87 billion.
with a price-to-profitability ratio of 17.6 based on the past twelve months through the second quarter of 2024. This valuation comes amid a difficult period for the company.
as evidenced by a 13.44% decline in revenue over the same period..
InvestingPro’s advice suggests that analysts expect sales to decline this year, in line with Citi’s cautious outlook. In addition, net income is expected to decline this year.
which may explain the possible downward revision to EBITDA forecasts mentioned in the article.
On the plus side, Darling Ingredients maintains a strong liquidity position.
as liquid assets exceed short-term liabilities .These financial stability may provide a barrier as the company moves through expected earnings challenges.
