Darling Ingredients Inc (NYSE:DAR), a natural ingredient supplier trying to be one of the 21st century’s leading innovators, is eying an increasingly Uncertain future on the marketplace. Investors are beginning to worry about the company as it consistently underperforms when compared to others in it industry, and recent trimmings undertaken by some shareholders could be a sign of more woes to come. The company’s stocks have still shown life, however, and Darling’s future is anything but certain at this point.
Investors question long-term prospects
Some investors don’t have much of a long-term appetite for Darling Ingredients (NASDAQ: DAR), and it’s not hard to see why. Stock prices have been inconsistent, having a relatively healthy 2017 before falling sharply in October, with shares dipping nearly 11% after JPMorgan Chase (NYSE:JPM) lost confidence in the company’s long-term prospects. Furthermore, a lackluster performance by Darling Ingredients stands to render its market future hopeless, especially if the company doesn’t see a serious change in management practices quickly.
Sure, Darling Ingredients isn’t collapsing before us; the company’s 2017 hasn’t been all too bad, but investors are never happy when they’re just barely getting by. Darling has consistently underperformed in its industry, with relatively poor returns on equity and a brand that may not be savvy enough to compete well into the 21st century. Whether the company sees success is largely a question of whether its leadership can turn things around, and make Darling competitive again in an industry that’s largely written it off.
Shareholders aren’t exactly stoked for Darling Ingredients, either. Vivaldi Asset Management recently cut back its holdings in Darling, for example, and other, smaller fish are likely to jump ship too if they don’t see progress soon. The company needs healthier earnings reports, and a stronger message it can bring to shareholders that it’s standing out in the market, if it wants to win back investor’s confidence.
As hedge funds continue to gamble over the company’s relatively bleak future, smaller investors would be well advised to wise up and realize how little potential companies like Darling have. While the company can’t fairly be described as a time bomb, ticking away its last moments on the market, it has no real opportunity to grow into the burgeoning success that investors are always on the lookout for. If you’re interested in a long-term prospect that could bring home dividends for years to come, Darling Ingredients is likely to let you down as it struggles with its own problems.
Keeping up the fight
Darling Ingredients isn’t going away without a fight, however. The company has tried to diversity itself already, particularly to appeal to investors after relatively weak earnings reports, and could stand to reshape itself in the future, too. If Darling is to remain attractive to startup investing shareholders for years to come, a makeover to help inspire confidence in the company once again certainly wouldn’t hurt.
Darling Ingredients could stand to re-establish itself as a serious player in the market if it continues to innovate, too. As the demand for biodiesel products heats up, for instance, the company’s work could prove attractive to investors banking on a greener future. With the biodiesel market alone to be worth some $40 billion by 2021, it wouldn’t be entirely unfair to say that Darling Ingredients could yet be saved by changing market preferences for greener energy. Still, Darling will need to do more to avoid costly disasters like the plunging stock prices it saw after JPMorgan Chase’s evaluation of the company. Some may not be wrong when they save that the company is oversold, but to argue that the company isn’t facing some hurdles right now would be to ignore reality itself. Until Darling Ingredients gives investors new reason to have confidence in the company’s long-term business strategy, shareholders should be cautious to throw their full weight behind the company as it plunges towards an increasingly uncertain future.