NEW YORK (TheStreet) -- Analysts at BMO Capital Markets reduced their earnings estimates on Darling Ingredients (DAR) to $0.41 per share from $0.76 in 2015 and to $0.96 per share from $1.06 in 2016. The firm reiterated its "outperform" rating and $22 price target.
Analysts said the company's first quarter earnings of 2 cents per share fell short of their below-consensus estimate, largely reflecting weaker-than-expected DGD performance and greater F/X headwind.
Additionally, "DAR has initiated an aggressive cost savings initiative and began to institute additional charges/raw material payment reductions in an effort to restore margins in its rendering business in light of the lower rendering prices," they said.
Despite the earnings reduction, analysts said that DAR remains a compelling investment opportunity as fundamentals reached an inflection points this quarter and positive legislative decisions are likely on the horizon.
In Monday's late morning trading, shares of Darling Ingredients fell 1.79% $15.36.
Darling Ingredients develops, produces, and sells natural ingredients from edible and inedible bio-nutrients worldwide.
TheStreet Ratings team rates DARLING INGREDIENTS INC as a 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. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, attractive valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including poor profit margins, a generally disappointing performance in the stock itself and generally higher debt management risk."