Darling's (DAR) 40M-Share Public Offering Is Priced at $19/Share

NEW YORK (TheStreet) -- Darling International (DAR) announced its public offering of 40 common shares will be priced at $19 a share.

The public offer will close on Dec. 18, and the company has granted the underwriters a 30-day option to buy up to 6 million more shares of common stock. Goldman Sachs, JP Morgan, and BMO Capital Markets will serve as book-running managers for the offering, while Avondale Partners will serve as co-manager.

Darling will use the money generated by the offering to help pay for the acquisition of VION Ingredients from VION Holding. That acquisition is expected to close in January.

Darling shares were down 4.2% to $19.15 on Friday following the news of the new public offering.

TheStreet Ratings team rates DARLING INTERNATIONAL INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about its recommendation:

"We rate DARLING INTERNATIONAL INC (DAR) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • DAR's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.81 is somewhat weak and could be cause for future problems.
  • DAR, with its decline in revenue, slightly underperformed the industry average of 0.1%. Since the same quarter one year prior, revenues slightly dropped by 6.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • DARLING INTERNATIONAL INC's earnings per share declined by 25.8% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, DARLING INTERNATIONAL INC reported lower earnings of $1.10 versus $1.47 in the prior year. For the next year, the market is expecting a contraction of 3.6% in earnings ($1.06 versus $1.10).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Food Products industry. The net income has significantly decreased by 25.6% when compared to the same quarter one year ago, falling from $37.17 million to $27.65 million.

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