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Ingredion Inc INGR

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Morningstar’s Analysis

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Maintaining $120 FVE as Ingredion Reports Strong Second-Quarter Results; Shares Undervalued

Seth Goldstein, CFA Senior Equity Analyst

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.

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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 Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Slow Growth
Employees 12,000