The Andersons, Inc.
) had a record 2011 as the agriculture sector remained hot. Can
this Zacks #1 Rank (Strong Buy) repeat in 2012? The stock is
getting no love from investors. It is cheap, with a forward P/E of
The Andersons (yes, that's really the company's real name), was
founded in 1947 by Harold Anderson in Ohio.
Originally a single grain elevator and truck terminal, it has grown
into an agribusiness company with 5 business segments in 16 states
and Puerto Rico. It also has rail equipment leasing interests in
Canada and Mexico.
The Andersons Beat by 20.6% in Q4
On Feb 8, The Andersons reported its fourth quarter and full year
results and blew by the Zacks Consensus for the quarter by 20
cents. Earnings per share were $1.17 compared to the consensus of
just 97 cents.
Revenue rose to $1.3 billion from $1.2 billion last year based
mainly on rising prices in the agriculture businesses.
The fourth quarter capped quite a year for the company with record
earnings of $5.09 per share, blowing away the prior record of $3.76
per share in 2007 when fertilizer prices were soaring.
The Grain and Plant Nutrient Group (aka fertilizers), once again
led the quarter with record income.
The Grain Group saw revenue jump 47% to $2.8 billion from $1.9
billion a year ago. Revenue at the Plant Nutrient Group rose to
$691 million from $619 million.
The Rail Group, which is a smaller segment, continued to see
significant improvement. The average utilization rate for 2011 rose
to 84.6% from 73.6% last year. Revenue jumped 12% to $107 million
from $95 million in 2010.
Analysts Cautious on 2012
The Andersons didn't give any 2012 guidance it its press release
but it did sound cautious on the conference call. While the
agriculture sector should remain strong, a repeat of a record year
like 2011 probably isn't in the cards.
The analysts see earnings falling 11% in 2011 even as the Zacks
Consensus Estimate rose to $4.53 from $4.47 in the last week.
Remember, the company made $5.09 in 2011.
The Andersons Is a Cheap Stock
Even with the solid earnings report, the shares aren't getting any
love. Investors are nervous about the outlook for the agriculture
sector in 2012, especially the fertilizer segment.
Shares have been trading in a narrow range for the last year.
However, that makes The Andersons very cheap.
In addition to a forward P/E under 10, it also has a price-to-book
ratio of 1.5. I use a P/B ratio under 3.0 to determine if there's
The company also has a really low price-to-sales ratio of 0.2. A
P/S under 1.0 usually indicates a company is undervalued and this
P/S is well below that.
Its other fundamentals are also solid, with a 1-year return on
equity (ROE) of 18.3, well above the S&P 500's average of
Shareholders are also rewarded with a dividend, currently yielding
2012 looks to be a transitional year for the agriculture sector
after years of a strong market.
However, the agribusiness companies like The Andersons have solid
value fundamentals. For value investors looking to invest in the
agriculture sector, it may be time to start stocking up.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She
is also the Editor in charge of the market-beating
Zacks Value Trader service
. You can follow her at
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