On Wednesday, Baird reaffirmed its Outperform rating on shares of Darling Ingredients (NYSE: NYSE:DAR), with a steady price target of $60.00. The firm's analysis is based on the latest commodity tracker update, which monitors waste fats, biofuels, and blending credits, including LCFS and D4 RINs. The data, reflecting prices up to last Friday, is considered a reliable measure of Darling Ingredients' quarterly EBITDA performance.
The report from Baird suggests that even a minor fluctuation in fat prices can significantly impact the company's financial outcomes. Specifically, each one-cent change in the average price of fats is estimated to cause a $12 million to $15 million adjustment in the quarterly EBITDA for Darling Ingredients' core operations.
Darling Ingredients operates in the industry of transforming waste products into usable ingredients, including those used in animal feed, pet food, and fuel. The company's financial health is closely tied to the fluctuating prices of the commodities it relies on, and the tracker serves as a tool for analysts and investors to gauge potential shifts in the company's earnings before interest, taxes, depreciation, and amortization (EBITDA).
The reaffirmed Outperform rating by Baird indicates a positive outlook on the company's stock, suggesting that Darling Ingredients may perform well against the market or its sector. The $60.00 price target is a projection of the stock's future price, reflecting Baird's confidence in the company's potential for growth or profitability.
Investors in Darling Ingredients and those monitoring the biofuel and waste-to-product sectors will likely keep a close eye on the bi-weekly updates provided by Baird.
Darling Ingredients has announced significant developments. The company's joint venture, Diamond Green Diesel (DGD), has secured a contract to supply sustainable aviation fuel to John F. Kennedy International Airport.
Darling Ingredients reported a second-quarter EBITDA of $274 million, net income of $78.9 million, and net sales totaling $1.5 billion. BMO Capital Markets responded to these earnings by raising its price target for Darling Ingredients from $54.00 to $55.00, maintaining an Outperform rating on the stock.
The company confirmed its 2024 EBITDA outlook, which remains between $1.3 billion and $1.4 billion, expressing confidence in an enhanced performance in the second half of the year. These projections led to BMO Capital slightly increasing its estimates and the stock's price target.
Furthermore, Darling Ingredients reported strides in debt repayment and stock repurchase, indicating a strong position for future growth and operational excellence.
InvestingPro Insights
As Baird maintains a favorable outlook on Darling Ingredients, the real-time data and InvestingPro Tips provide additional context for investors. The company's market capitalization stands at $6.21 billion, with a Price/Earnings (P/E) ratio of 16.97, suggesting a reasonable valuation compared to earnings. Despite a challenging environment reflected in a 13.44% revenue decline over the last twelve months as of Q2 2024, Darling Ingredients has managed a gross profit margin of 23.77%, indicating a degree of resilience in its operations.
InvestingPro Tips highlight that while analysts have revised their earnings expectations downwards and anticipate a sales decline this year, they also predict the company will remain profitable. Furthermore, Darling Ingredients' liquid assets surpass its short-term obligations, which is a positive sign of financial stability. It's worth noting that the company has been profitable over the last twelve months and has delivered a strong return over the last five years. However, it does not pay a dividend, which could be a consideration for income-focused investors.
For those looking to delve deeper into the company's financials and future prospects, there are additional InvestingPro Tips available at https://www.investing.com/pro/DAR. These tips could further inform investment decisions, especially in light of the industry's commodity price sensitivities and Darling Ingredients' strategic positioning within the market.
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