Darling Ingredients Inc. Just Recorded A 39% EPS Beat: Here's What Analysts Are Forecasting Next

Darling Ingredients Inc. (NYSE:DAR) came out with its third-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It looks like a credible result overall - although revenues of US$851m were what the analysts expected, Darling Ingredients surprised by delivering a (statutory) profit of US$0.61 per share, an impressive 39% above what was forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Darling Ingredients

Taking into account the latest results, the consensus forecast from Darling Ingredients' eight analysts is for revenues of US$3.55b in 2021, which would reflect a satisfactory 4.1% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to tumble 39% to US$1.87 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$3.55b and earnings per share (EPS) of US$1.71 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of US$50.90, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Darling Ingredients analyst has a price target of US$84.00 per share, while the most pessimistic values it at US$33.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that Darling Ingredients is forecast to grow faster in the future than it has in the past, with revenues expected to grow 4.1%. If achieved, this would be a much better result than the 0.3% annual decline over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 2.9% next year. Not only are Darling Ingredients' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Darling Ingredients following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$50.90, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Darling Ingredients going out to 2024, and you can see them free on our platform here..

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Darling Ingredients (at least 1 which can't be ignored) , and understanding them should be part of your investment process.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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