Darling Ingredients is an underrated player in the game of clean energy
Darling Ingredients Inc. (NYSE: DAR) is a producer of organic ingredients and one of the largest producers of renewable clean energy thanks to its wide range of sustainable protein and fat products. They collect waste streams from the food industry and convert them into specialty ingredients like hydrolyzed collagen, feed-grade edible fats and fats, animal proteins and meals, plasma, pet food ingredients, fuels and green bioenergy. To put it very clearly: You are into clean energy. Darling Ingredients does an excellent job.
On May 20, the company announced that its Rousselot brand, a provider of collagen-based solutions, had expanded its line of purified, modified pharmaceutical-grade gelatins with the launch of X-Pure GelDAT. According to the company’s press release, the new product offers guaranteed purity and consistency on a scale that is critical to the successful development of biomedical applications in the human body.
Last week, Darling Ingredient stock was down 10%, off its March 15th high of $ 79.65. The pullback on the DAR’s 120-day moving average appears to have run out of steam, and the stock is still 209% ahead of the previous year.
In a quick rundown of Darling Ingredients’ results over the past 12 months, DAR has managed to beat expectations every time. However, the company has some fundamental issues with its income statements that should give investors a break.
Although sales increased 5% in the past 12 months, the company recorded sales declines for two consecutive years in fiscal years 2018 and 2019. In addition, sales have only increased 2.8% since the 2017 financial year. The overall growth pattern is much better as the company has increased net income by more than 180% since fiscal 2017. However, the inconsistency remains. including declining net income for FY 2018 and FY 2020.
Additionally, Darling Ingredients has total debt of $ 1.59 billion and only $ 71.2 million in cash. Basically, that just doesn’t add up to the fact that DAR is currently trading at a price / earnings ratio of 31.33. And when you consider that there isn’t much contrary pessimism to unwind – there are few short sellers while analysts already love the stock – there is some logic behind waiting for DAR fundamentals to get sunnier before hitting a flyer takes.