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Bull of the Day: The Andersons (ANDE)

·3 min read

The Andersons, Inc. (ANDE) is experiencing the best agriculture market conditions since 2014. This Zacks Rank #1 (Strong Buy) is expected to grow revenue by the 22% in 2021.

The Andersons is a agriculture company headquartered in Ohio that conducts business in several segments including commodity trading, ethanol, plant nutrient and rail.

Huge Beat in the First Quarter 2021

On May 4, The Andersons reported its first quarter results and crushed the Zacks Consensus by $0.52. Earnings were $0.46 compared to the Zacks Consensus of a loss of $0.06.

That's an incredible 866% beat.

The company said it was their best first quarter performance since 2014, which was the last time I wrote about it as a Bull of the Day.

Ethanol margins have improved "significantly" with ethanol prices reaching levels not seen in over 6 years.

Plant Nutrient, which is the fertilizer segment, had the best first quarter since 2008 with an 18% increase in tons sold and strong margins.

Even Rail got into the game, with its best results since the fourth quarter of 2018.

High scrap steel prices allowed The Andersons to scrap older railcars where it made economic sense and, with credit recoveries, led to the improvement in the Leasing business.

Analysts Are Bullish on 2021 and 2022

The Andersons is calling this agriculture market a "demand-driven" agriculture rally.

It sees the strong demand continuing through the peak planting season.

2 estimates have been raised in 2021 in the last 2 months, pushing the 2021 Zacks Consensus Estimate up to $1.58 from $1.31.

That is earnings growth of 1,655% as the company only made $0.09 last year.

2022 is also looking hot with another 18.4% earnings growth expected.

2 estimates were raised for 2022 in the last 60 days, pushing the 2022 Zacks Consensus Estimate up to $1.87 from $1.63 during that time.

Shares at 2-Year Highs

The agriculture companies are cyclical and this cycle is in the early innings.

Shares have been on the move higher, adding 30% year-to-date to 2-year highs.

But they still haven't broken out to new all-time highs.

As you can see in the 10-year chart, the last "peak" in the shares was in 2014, which was the "peak" of the business in that cycle.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Because the "E" of the P/E has been rising, the company trades with a forward P/E of just 20.2.

It's also shareholder friendly. It pays a dividend, currently yielding 2.2%.

While many agriculture businesses have strong earnings outlooks for 2021, they don't have the stellar Zacks Rank of Strong Buy as The Andersons.

Nutrien (NTR) and The Mosaic Company (MOS) are Zacks Rank #2 (Buy) and #3 (Hold) stocks, respectively.

For investors looking for agriculture exposure, The Andersons is one to keep on the short list.

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Nutrien Ltd. (NTR) : Free Stock Analysis Report

The Mosaic Company (MOS) : Free Stock Analysis Report

The Andersons, Inc. (ANDE) : Free Stock Analysis Report

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