Yahoo Finance Analyzing Ingredion’s Strong Performance in 2Q15
Ingredion’s 3Q15 Results: How Will It Perform?
2Q15 performance recap
Ingredion (INGR) reported its 2Q15 financial results on July 30. The net sales in 2Q15 were $1,449 million. The net sales improved by 3% compared to 1Q15. However, compared to same quarter last year, the net sales fell by 2%. The company also reported a better net margin of 7.4% compared to both 1Q15 and 2Q14.
For 2Q15, Ingredion’s reported and adjusted operating income were $173 million and $180 million, respectively. They rose 6% and 11%, respectively, compared to $163 million in reported operating income in 2Q14. The adjusted operating income rose from $110 to $127 million in 2Q14. During the first half of the year, the company repurchased ~364,000 shares of common stock for $29 million.
Analysts expect the revenue to grow by 2% this quarter. They expect the revenue to be $1.47 billion in 3Q15. However, if the net sales report according to the estimates, then it would show a fall of 5% compared to 3Q14. Analysts also expect an earnings surprise of 0.6% in the upcoming quarter.
Performance drivers in 2Q15
The main reason for the lower revenue—compared to same quarter last year—was changes in foreign currency-exchange rates and the pass through of lower corn costs, partially offset by pricing in South America and acquisition-related volume growth. The rise in the operating income was primarily due to Penford—acquisition related—and strong specialty volumes, margin expansion in North America, and pricing actions in South America. The negative effect of foreign exchange partially offset the positive changes affecting operating income.
Peers’ performance
Ingredion’s competitors in the industry are J M Smucker (SJM), Sanderson Farms (SAFM), Tyson Foods (TSN), and ConAgra (CAG). They reported net margins of 7%, 6.9%, 3.4%, and -41.3% for their last reported quarter, respectively. The Guggenheim Mid-Cap Core ETF (CZA) and the Power Shares Dynamic Large Cap Value ETF (PWV) invest 2.0% and 1.4% of their portfolio in ConAgra’s stock.
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