Will Ingredion’s Earnings Beat Consensus Estimates in 3Q15?

Ingredion’s 3Q15 Results: How Will It Perform?

(Continued from Prior Part)

Reported EPS in the previous quarters

Ingredion (INGR) reported an EPS (earnings per share) $1.53 in 2Q15. It beat analysts’ estimates by 3.4%. The company had an EPS of $1.30 in 1Q15. It beat the estimates by 6%. The EPS consensus estimate for 3Q15 is $1.51. We’ll have to wait and see if Ingredion will beat the estimates this quarter as well. The analysts that follow this company are expecting it to grow the earnings at an average annual rate of 0% over the next five years. This year, analysts are forecasting the earnings to rise 11.4% over last year. Next year, analysts expect earnings growth of 9.2% over this year’s forecasted earnings.

Management overview of 2Q15

Ilene Gordon is the chairman, president, and CEO at Ingredion. She said that “We are pleased with the second quarter results that were highlighted by higher specialty volumes, good operating efficiency, and strong earnings per share growth. Although we experienced foreign-exchange headwinds across all four regions, our business model continues to work. In fact, operating income improved in North America, South America, and Asia Pacific. We remain confident in our 2015 outlook. Strong specialty volumes, improved product mix, disciplined cost management, and the impacts of the first quarter acquisition of Penford Corporation are expected to drive bottom-line growth.”

Forward guidance

The company anticipates the 2015 adjusted EPS to be $0.08–$0.12 per share. The growth will result from the Penford and Kerr acquisitions. However, excluding acquisition-related costs, it’s expected to be $5.60–$5.90 compared to the adjusted EPS of $5.20 in 2014. The guidance assumes an overall improvement in North America, modest improvement in Asia-Pacific, South America in line, and EMEA (Europe, the Middle East, and Africa) down slightly. It would be due to unfavorable changes in currency rates, an effective tax rate of 29%–31%, and EPS accretion attributable to the accelerated share repurchase program in 2014. The sales of higher-value specialty ingredients are still expected to contribute to the margin expansion. In 2015, the cash generated by operations and capital expenditures is expected to be ~$650–$700 million and $300 million, respectively.

Ingredion’s rivals in the industry include Hormel Foods (HRL), Flowers Foods (FLO), and Kraft Heinz (KHC). They reported an EPS of $0.54, $0.24, and $0.17 in their last reported quarter, respectively. The iShares S&P Mid-Cap 400 Value (IJJ) invests 0.9% of its portfolio in Ingredion’s stock.

Browse this series on Market Realist:

• Part 1 - Ingredion Will Report Its 3Q15 Results on October 29

• Part 2 - Analyzing Ingredion’s Strong Performance in 2Q15

• Part 3 - Ingredion: Segment Contributions and the Kerr Acquisition