The Anderson’s, Inc. (ANDE) reported second quarter results on Aug 5 and missed on analysts’ estimates, yet third quarter and full-year Zacks Consensus Estimates continue to move higher. ANDE trades at 14x forward earnings.
Company Description
The Anderson’s is a diversified agribusiness company with interests in grain and plant nutrients, railcar leasing and repair, industrial products formulation, turf products, retailing and ethanol operations. The company has operations in 12 states and Puerto Rico as well as rail equipment leasing interests in Canada and Mexico.
Grain Business Strong in the Second Quarter
On Aug 5, The Andersons reported second quarter results that missed on the Zacks Consensus Estimate by 4 cents. The estimates had been rising into the number. Earnings per share were 87 cents compared to the Zacks Consensus Estimate of 91 cents.
Revenues fell year over year to $811 billion from $1.1 billion but second quarter 2008 was a record quarter due to the high fertilizer prices, which have since fallen sharply. The huge margins in the Plant Nutrient Group in 2008 accounted for nearly two-thirds of the income in that quarter.
The grain business had its third best second quarter mainly due to good space income. The ethanol business was also profitable in the quarter.
The Rail Group struggled due to the economic conditions as rail traffic has declined by double digits. Income fell to $0.6 million from $4.9 million in the year ago period.
Margins were down significantly in the Plant Nutrient Group as nutrient prices fell. Sales volumes also declined as retailers reduced their inventory holdings. The company is optimistic about the future of the Plant Nutrient Group as it believes the price declines are behind it now.
Analysts Optimistic
The Andersons didn’t provide any forward guidance but analysts still appear bullish despite the second quarter miss.
The third quarter Zacks Consensus Estimate is up 3 cents to 37 cents in the last 30 days.
The full year Zacks Consensus Estimate has jumped 3% in the last month to $2.13 from $2.07 per share as 2 out of 5 covering analysts has raised in that time period and 1 has lowered.
Value Fundamentals
The Andersons is still a Zacks #1 Rank (strong buy) stock. It is trading with a price-to-book ratio of 1.42. The company has a 5-year average return on equity (ROE) of 16.56%.
The dividend tradition continues to live on. It also announced the payment of its 52nd consecutive quarterly dividend. The stock pays a yield of 1.10%.
