Darling Ingredients holds a place in the IBD 50 and is today's IBD 50 Stocks to Watch selection thanks to a favorable chart.
Ratings Show Superior Performance
A high Composite Rating of 97 for Darling Ingredients combines the company's strong EPS Rating of 93 and Relative Strength Rating of 86.
Darling Ingredients ranks first in the agricultural operations industry group, which is No. 64 among IBD's 197 groups.
The stock is trading in a cup-with-handle base, near a buy point of 80.15. The cup has a depth of 36%. The slightly deeper-than-ideal base is likely due to the larger downtrend in the market in recent weeks.
The handle's depth of 10% has effectively lowered the entry point. Shares are holding above the 200-day and 50-day moving averages.
The relative strength line, which measures the stock's performance against the S&P 500, has been trending upward since July.
Stocks To Watch: Quarterly Earnings Missed Views
For its second quarter, the company's sales were $1.65 million, an increase of 38%. Diluted earnings per share of $1.23, up 5% year over year, were lower than estimates, according to IBD Stock Checkup.
However, management affirmed its adjusted EBITDA outlook for the full year. Analysts expect EPS growth of 37% this year and 26% in 2023, according to FactSet.
The Texas-based company operates locations in North and South America, Europe, Asia and Australia. It develops and produces natural ingredients from edible and nonedible bio-nutrients.
Medical, pharmaceutical and medical sports and medical research companies use its biomedical gelatin products. The company also serves the biofuel, agriculture, and food industries.
Darling Ingredients repurchased 700,000 common shares in the second quarter for a total of $48.7 million. It has also acquired two independent rendering companies, Valley Proteins and Brazil-based FASA Group. The acquisitions will increase Darling's leadership in the supply of low carbon waste fats that can be used in renewable diesel.
More funds have been buying the stock, according to IBD MarketSmith, a bullish indicator.
