Analyst Note| Seth Goldstein, CFA |
Ingredion reported strong second-quarter results as adjusted operating income was up 64% versus the prior-year quarter. The growth was driven by higher volume, increased prices, and a mix shift toward specialty products. Management reinstated guidance for the year and expects 2021 adjusted earnings per share to be in line with 2019. The results were slightly above our view for the year that Ingredion would see sales continue to recover after the COVID-19-related slowdown affected 2020 results. We have slightly increased our near-term outlook for Ingredion. We have also updated our long-term tax forecast for the impact of a higher U.S. corporate tax rate. Having updated our model to reflect these changes, we maintain our $120 fair value estimate. Our narrow moat rating is also unchanged.