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Ingredion Inc INGR

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Maintaining $120 FVE as Cost Inflation Affects Ingredion's Third-Quarter Results; Shares Undervalued

Seth Goldstein, CFA Senior Equity Analyst

Analyst Note

| Seth Goldstein, CFA |

Ingredion reported decent third-quarter results, as operating income fell 9% year on year versus the prior-year quarter. The decline occurred despite a 17% sales growth as cost increases grew faster. However, we anticipated higher costs weighing on profits for the remainder of the year. Since Ingredion can renegotiate the bulk of its contracts during the fourth quarter, we think it will be able to raise prices to offset much of its cost inflation beginning in 2022. With our long-term outlook intact, we maintain our $120 per share fair value estimate and narrow moat rating.

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Company Profile

Business Description

Ingredion manufactures ingredients for the food, beverage, paper, and personal-care industries. Sweeteners (syrups, maltodextrins, dextrose, and polyols) account for about 35% of sales, starches (for food and industrial use) around 45%, and co-products the balance. Value-added, specialty ingredients account for nearly one third of sales, with the balance being commodity-grade ingredients. With the majority of sales outside the U.S., Ingredion is a global player with good exposure to developing markets, including Latin America and Asia-Pacific.

5 Westbrook Corporate Center
Westchester, IL, 60154
T +1 708 551-2600
Sector Consumer Defensive
Industry Packaged Foods
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Slow Growth
Employees 12,000