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NEW YORK (TheStreet) -- Darling Ingredients (DAR) has been downgraded by TheStreet Ratings from Buy to Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate DARLING INGREDIENTS INC (DAR) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its robust revenue growth -- not just in the most recent periods but in previous quarters as well. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- DAR's very impressive revenue growth greatly exceeded the industry average of 0.5%. Since the same quarter one year prior, revenues leaped by 124.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The debt-to-equity ratio of 1.16 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, DAR's quick ratio is somewhat strong at 1.18, demonstrating the ability to handle short-term liquidity needs.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Food Products industry and the overall market, DARLING INGREDIENTS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- DARLING INGREDIENTS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, DARLING INGREDIENTS INC reported lower earnings of $0.90 versus $1.10 in the prior year. For the next year, the market is expecting a contraction of 8.9% in earnings ($0.82 versus $0.90).
- 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 48.2% when compared to the same quarter one year ago, falling from $27.65 million to $14.32 million.
- You can view the full analysis from the report here: DAR Ratings Report