On Sep 6, we upgraded our recommendation on
The Andersons, Inc.
) to Outperform based on its impressive second-quarter 2013
Why the Upgrade?
Andersons, on Aug 6, reported revenues of $1.57 billion in the
second quarter, up 19% year over year. The results were way ahead
of the Zacks Consensus Estimate of $1.38 billion.
Earnings per share rose 1% year over year to $1.57 and beat the
Zacks Consensus Estimate by 5 cents. The upbeat results were
driven by record operating profit at Ethanol and Rail Group, and
increased profit in Retail Group. Andersons delivered positive
earnings surprises in two of its last four quarters with an
average beat of 48.13%.
Ethanol Group generated record operating income of $10.6 million
in the second quarter versus a loss of $2.1 million in the
year-ago quarter. The improvement came on the back of improved
ethanol margins and increased co-product income. In addition,
Rail Group posted record operating income of $24.3 million in the
first half of 2013.
In Sep 2013, Andersons finalized the purchase of railcar repair
and cleaning provider Mile Rail, LLC. The acquisition will
enhance Andersons' current railcar repair network by expanding
its geographical footprint and business mix. Furthermore, the
Mile Rail acquisition is expected to increase Andersons' railcar
repair revenues by 25%.
Following the release of second quarter results, Zacks Consensus
Estimates for 2013 and 2014 have gone up 3.3% and 6.7%,
respectively, to $4.13 per share and $5.26 per share,
respectively. With earnings estimates for both 2013 and 2014 are
moving up, Andersons now retains a Zacks Rank #1 (Strong Buy).
Even though the Grain group will likely remain affected by the
2012 drought and the Turf & Specialty group by additional
expenses, Andersons expects continuous focus on operational
efficiency, co-product production and cost control to bode well
for Ethanol Group. The Rail Group will benefit from increased
financing opportunities, higher railcar lease rates, larger
railcar fleet and expansion of the railcar repair business.
Other Stocks to Consider
Amira Nature Foods Ltd.
Pilgrim's Pride Corporation
), both carrying a Zacks Rank #1 (Strong Buy), and
Gruma S.A.B. de CV
) with a Zacks Rank #2 (Buy), are performing well in the similar
industry and are also worth considering.
ANDERSONS INC (ANDE): Free Stock Analysis
AMIRA NATURE FD (ANFI): Free Stock Analysis
GRUMA SA-ADR B (GMK): Free Stock Analysis
PILGRIMS PRIDE (PPC): Free Stock Analysis
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