We are maintaining our Outperform recommendation on Andersons with
a target price of $72. The company's earnings per share rose 49%
year over year to $1.56. Andersons will benefit from acquisitions
over the past year. The momentum in the Ethanol group is expected
to continue for the balance of 2014. Even though the Plant Nutrient
Group was impacted by adverse weather in the first quarter, volume
was up approximately 6% during the first half of the year,
regaining all of the first quarter volume reduction. It is expected
to benefit from a significant corn crop planting in the second
quarter. As of second-quarter end, the Rail Group's utilization
rate was 89.1%, up from 86.1% in the prior year, and is expected to
increase in the back half of the year.
Founded in 1947 in Maumee, Ohio, The Andersons, Inc. (ANDE) is a
diversified company operating in six different business segments,
ranging from buying, selling and storing grain to leasing railcars
and running retail stores catering to the latest home hardware
needs. The company has operations across the U.S. and in Puerto
Rico, plus rail equipment leasing interests in Canada and
The Grain Group (64% of total revenue in fiscal 2013) operates
grain elevator facilities in the U.S. Corn Belt. In addition to
storage, merchandising and grain trading, the Grain group provides
marketing, risk management, and corn origination services to its
customers and affiliated ethanol production facilities. Grain is a
significant investor in Lansing Trade Group, LLC (LTG), an
established commodity trading, grain handling and merchandising
business, with operations across the country and global
The Ethanol Group (15%) has ownership interests in ethanol
production facilities organized as separate limited liability
companies. The plants are located in Iowa, Ind., Mich., and Ohio,
with a combined capacity of 330 million gallons of ethanol. The
business purchases and sells ethanol, offers facility operations,
risk management, and ethanol, corn oil and distillers dried grains
marketing to the ethanol plants where it invests and operates, as
well as to third parties.
The Plant Nutrient Group (13%) manufactures and distributes
agricultural and related plant nutrients and pelleted lime and
gypsum products in the U.S. Corn Belt, Florida and Puerto Rico. The
Group provides warehousing, packaging, and manufacturing services
to basic nutrient manufacturers and other distributors.
The Retail Group (3%) operates retail stores under the name "The
Andersons" in the cities of Columbus and Toledo in Ohio, and also a
specialty food store under the name "The Andersons Market" in the
same state. The retail store provides home improvement products and
other mass merchandise categories as well as specialty foods, wine,
and indoor and outdoor garden centers. The specialty food store
includes fresh product offerings like produce, deli, bakery items
and fresh meat, specialty and conventional dry goods, and wine.
The Rail Group (3%) repairs, sells and leases a fleet of over
23,000 railcars and locomotives of various types, as well as a
small number of containers. The group has a diversified fleet of
car types (boxcars, gondolas, covered and open top hoppers, tank
cars and pressure differential cars), locomotives, and containers.
The Group mainly operates in the used car market by purchasing used
cars, and repairing and refurbishing them for specific markets and
The Turf and Specialty Group (2%) produces and markets turf and
ornamental plant fertilizer products and control products for use
in lawns and gardens, and professional golf and landscaping
industries, as well as corncob based products to the pet and the
industrial markets. Professional turf products are sold directly
and through distributors to golf courses.
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