Corn Products International, Inc. (CPO) is seeing volumes rebound, especially in the South America and Asia/Africa segments. CPO is trading with a forward P/E of 14.6.
Company Description
Corn Products is the largest producer of dextrose in the world and manufactures starches, high fructose corn syrups and glucose.
The company provides a variety of ingredients to customers in 60 industries including food, beverages, pharmaceuticals, animal feed, corrugating, paper and textiles.
Corn Products has 28 plants in 13 countries.
Sales Rose 7% in the Fourth Quarter of 2009
On Feb 2, Corn Products announced its fourth quarter results which saw sales improve by 7% over the fourth quarter of 2008. The company saw growth in all three of its segments as volumes and margins also improved over the year ago period.
North America sales lagged, falling 2% to $554 million from $563 million in the fourth quarter of 2008. The decline was due to negative price/mix of $25 million, partially offset by higher volumes of $4 million and a stronger Canadian dollar of $12 million.
South America continued to be hot, as sales jumped 21% due to favorable foreign currency translation and improved volumes.
In Asia/Africa, sales climbed 16% due to higher volumes and favorable currency translation.
The second half of the year highlighted the turnaround in economic conditions as volumes began to recover and foreign currencies worked in the company’s favor.
The second half showed marked improvement as we worked through the higher corn costs, foreign currencies turned in our favor, and volumes began to recover.
2010 Outlook
In February, Corn Products was optimistic but yet cautious about 2010.
While most of the North American contraction was completed by the end of 2009, it believes the North American business environment would remain challenging. It still forecast modest volume growth, however, driven by sweetner sales in Mexico.
South America and Asia/Africa will be the segments propelling growth. Corn Products expects better volumes due to the strength in the Brazil economy and continued HFCS volume recovery in Korea.
It expects 2010 earnings per share to be in the range of $2.25 to $2.60 per share, or growth of between 12% and 29% compared to 2009.
Zacks Consensus Estimates Rise
Given the company’s projections, it’s not surprising that the 2010 Zacks Consensus has risen.
The 2010 Consensus is up 12 cents to $2.42 per share in the last 60 days. This is right in the middle of the company’s guidance range.
Analysts now see 2010 earnings growth of 20.56%.
For the first quarter, the Zacks Consensus Estimate has weakened a penny to 47 cents in the last 2 months.
Corn Products is scheduled to report its first quarter earnings on Apr 27.
Value Fundamentals
Corn Products is a Zacks #1 Rank (strong buy). It has a price-to-book ratio of 1.6 which is well under the industry average of 2.1 and within the value parameters as it’s under 3.0.
The company also pays a dividend, which it maintained throughout all of 2009. It currently yields 1.6% which is higher than the industry average which is zero.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.
