Darling Ingredients Faces Major Earnings Decline in 2024

In a recent report, Darling Ingredients Inc. (DAR) shows a troubling outlook as revenue is forecasted to drop 12% in 2024, with adjusted earnings anticipated to fall by 41%. The company's substantial downward revisions raise concerns for investors looking for stable growth.

Date: 07-10-2024

AI Rating: 4

Darling Ingredients Inc. (DAR) is currently experiencing a significant downturn in its financial outlook, particularly as it relates to its earnings and revenue. The company had previously enjoyed remarkable revenue growth, reporting over 33% growth for two consecutive years in 2021 and 2022. However, this report indicates a stark reversal in fortunes.

The most alarming data comes from next year's projections, as DAR's revenue is expected to decline by 12% in 2024. This anticipated revenue drop is compounded by a drastic decrease in adjusted earnings, which are projected to plummet by 41%, from $4.15 per share to just $2.45 per share in FY24. Such steep declines can impact investor confidence significantly, as earnings and revenue are critical indicators of a company's health and profitability.

Moreover, the consensus earnings estimate for FY24 has seen a significant decline of 49% over the past year, with the FY25 estimate also predicted to be 33% lower. This persistent negativity in earnings projections places Darling Ingredients in a precarious position. It is further emphasized by the company currently holding a Zacks Rank of #5 (Strong Sell), indicating a lack of confidence in their ability to recover in the near term.

While there are acknowledges of improvements in certain business segments and strategic goals including cost-cutting and debt reduction, the downward revisions to earnings estimates raise substantial red flags for investors. Given the substantial fall in stock price over the last several years—specifically a 48% drop in the last three years—this trend could indicate a prolonged period of struggle for DAR.

Overall, the outlook for Darling Ingredients is concerning. Investors may wish to remain cautious as the earnings outlook continues to deteriorate and as past growth trends fail to materialize in the current economic environment.

Stocks: DAR