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The Andersons Q2 Preview: Rebound Quarter Inbound?

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The Zacks Basic Materials Sector got off to a hot start in 2022, but the sector has declined nearly 18% over the last three months vs. the S&P 500’s decline of roughly 2%, alluding that the bears have come out in full force as of late.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

One company residing within the sector, The Andersons ANDE, is scheduled to release quarterly results after market close on Tuesday, August 2nd.

The Andersons is a regional grain merchandiser with diversified businesses in agriculture, plant nutrient formulation and distribution, turf product production, railcar marketing, and general merchandise retailing.

Currently, the company carries a Zacks Rank #5 (Strong Sell), with an overall VGM Score of an F. Right off the bat, that’s a combination you never want to see.

Still, how does the company shape up heading into the print? Let’s find out.

Share Performance & Valuation

Year-to-date, ANDE shares have put together a notably stronger performance than the S&P 500, declining 7%. However, as you can see, following the company’s recent bottom-line miss (red arrow), shares plunged.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Over the last year, ANDE shares are well in the green, up an impressive 36% and extensively outperforming the general market. As we can see, the market reacts positively to EPS beats and poorly to bottom-line misses.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Shares appear slightly overvalued, as displayed by its Style Score of a D for Value. The company’s forward P/E ratio of 13.8X represents a steep 93% premium relative to its Zacks Sector.

Quarterly Estimates

Analysts have been quiet over the last 60 days, with zero estimate revisions hitting the tape. For the quarter to be reported, the Zacks Consensus EPS Estimate resides at $1.10, penciling in a double-digit decline of 16% from the year-ago quarter.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

However, the top-line appears to be in much better shape, with the quarterly revenue projection of $4.1 billion representing a rock-solid 25% uptick from year-ago sales of $3.3 billion.

Quarterly Performance

The Andersons has primarily exceeded bottom-line expectations; recording six EPS beats over its last eight quarters. However, the company posted a wide 72% bottom-line miss in its latest quarter, undoubtedly a reason why shares plummeted.

Quarterly revenue results have been strong as of late, with The Andersons chaining together six consecutive bottom-line beats. The chart below illustrates the company’s revenue on a quarterly basis.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Putting Everything Together

ANDE shares have been a hot item over the last year, increasing by a double-digit percentage and crushing the S&P 500’s performance. However, the company’s shares plummeted following its latest quarterly report.

In addition, valuation levels appear elevated, and the bottom-line is projected to register a double-digit percentage decline year-over-year. Although, the top-line looks to register solid year-over-year growth.

The market reacts well to EPS beats and poorly to bottom-line misses. Quarterly results have primarily been reported above expectations, but the company registered a sizable bottom-line miss in its latest print.

Heading into the quarterly report, The Andersons ANDE carries a Zacks Rank #5 (Strong Sell).


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