On Thursday, Raymond (NSE:RYMD) James analyst Justin Jenkins reaffirmed a Strong Buy rating for Darling Ingredients (NYSE:DAR), with a steady price target of $65.00, representing a potential 69% upside from the current price of $38.52. According to InvestingPro data, the stock appears undervalued based on its Fair Value analysis, with analyst targets ranging from $40 to $65. Jenkins highlighted the resilience of the company’s legacy business segments, such as Feed and Food, which he believes offer a competitive edge to Darling Ingredients’ growing sustainable fuels division. The company maintains a healthy liquidity position with a current ratio of 1.41, indicating strong operational stability. He emphasized the importance of the company’s joint venture, Diamond Green Diesel (DGD), noting its significant presence and early lead in the renewable diesel (RD) and sustainable aviation fuel (SAF) markets.
Jenkins pointed out that renewable diesel and related sustainable fuels are key structural growth drivers for Darling Ingredients. He also mentioned the strategic advantage provided by the company’s "upstream" operations. According to Jenkins, these factors position Darling Ingredients favorably for long-term integration value.
The analyst expressed confidence that Darling Ingredients is currently at or near a low point in terms of business fundamentals and market sentiment. Jenkins anticipates a rebound in both the business performance and its trading multiple throughout 2025. InvestingPro subscribers have access to additional insights, including 6 more ProTips and comprehensive financial health analysis, which currently rates the company as ’FAIR’ with a score of 2.38 out of 5.
The Strong Buy rating is based on Jenkins’ assessment of Darling Ingredients’ potential for recovery and growth, especially given the expansion of sustainable fuel markets. He predicts that the company’s strategic positioning will lead to stronger performance in the future.
In summary, Jenkins’ reiteration of the Strong Buy rating reflects his positive outlook on Darling Ingredients’ ability to navigate through a challenging macroeconomic environment, leveraging its established business lines to support its sustainable fuels venture. Despite a 14.19% decline over the past year, the company maintains profitability with a gross margin of 23.35% and is one of 1,400+ US stocks covered by detailed Pro Research Reports available exclusively on InvestingPro.
In other recent news, Darling Ingredients Inc. reported fourth-quarter earnings, which missed analyst expectations, with adjusted earnings per share of $0.63, slightly below the consensus of $0.64. The company’s revenue for the quarter was $1.42 billion, falling short of the projected $1.51 billion. Despite this, the company saw an increase in net income for Q4, rising to $101.9 million from $84.5 million in the same period last year.
Analyst Derrick Whitfield of Texas Capital Securities regarded the release positively, citing margin improvement in each segment, lower than expected quarterly capital expenditure, successful sustainable aviation fuel production startup, and an encouraging outlook on the impact of 45Z legislation on waste fats.
For the full year 2024, Darling reported net sales of $5.7 billion, a decrease from $6.8 billion in 2023, with a net income of $278.9 million or $1.73 per diluted share. These are recent developments that investors have been closely monitoring.
Looking forward, the company provided 2025 guidance for combined adjusted EBITDA of $1.25 billion to $1.30 billion, expressing confidence in a stronger year ahead due to robust raw material volumes and expectations for higher fat prices.
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