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The Andersons, Inc. (ANDE - Analyst Report) continues to rebound from the downturn in agriculture as the grain and ethanol division recently posted record second quarter results.

The Andersons (yes, that's really the company's real name), was founded in 1947 by Harold Anderson in Ohio.

Originally a single grain elevator, it has grown into an agribusiness company with 5 business segments in 16 states and Puerto Rico. It also has rail equipment leasing interests in Canada and Mexico.

The Andersons Beat the Zacks Consensus Estimate By 14.3%

On Aug 4, The Andersons reported its second quarter results and surprised on the consensus for the third straight quarter. It has been a remarkable turnaround from the tough times of 2009 as fertilizer prices and demand plunged.

Earnings per share were $1.36 compared to the consensus of $1.19 per share. In the second quarter of 2009, the company earning 87 cents.

It is well ahead on EPS for the first six months of the year than in 2009, reporting $2.02 in 2010 compared to just $1.14 in 2009.

Fertilizer is coming "back" as the Nutrient Group saw revenue rise 15% to $228 million from $198 million last year in its second best second quarter ever. Instead of de-stocking as they did in 2009, retail farm centers were building inventories in 2010 which boosted the turnaround.

The company's largest division, the Grain & Ethanol Group, had its best second quarter ever. Both grain and ethanol were hot. The grain business was boosted by increased space income. The ethanol business benefited from a large portion of the ethanol sales being contracted during prior periods, when margins were at high levels.

The group's investment in the Lansing Trade Group also paid off with higher income than 2009.

The Rail Group, Retail Group and Turf & Specialty Group had weaker quarters. Utilization fell in the Rail Group to 71% from 80.6% in the year ago quarter. But these are smaller divisions so the better results in the Grain and the Nutrient Groups more than made up for it.

No Guidance But Zacks Consensus Moves Higher

The Andersons did not provide any formal guidance going forward but analysts are bullish after the big beat in the second quarter.

1 estimate has moved higher for the third quarter which has moved the Zacks Consensus higher by 3 cents to 39 cents.

2 estimates have also moved higher for 2010 boosting the consensus by 7 cents to $3.01 per share. That is earnings growth of 44.9% compared to 2009.

Value Fundamentals

When fertilizers were hot in 2008, it was hard to find value in these agriculture plays as the stocks were bid up but now, after the crisis, these companies have attractive valuations again.

The Andersons is trading with a forward P/E of 12.5, under the industry average of 13.5. Its price-to-book ratio is 1.6 which is within the value parameters and also under the industry average of 3.2.

The company also has an excellent price-to-sales ratio of 0.2 whereas the industry is at 2.8.

The Andersons has been a consistent performer over the years and sports an average 5-year return on equity (ROE) of 15.1%.

The Andersons is a Zacks #1 Rank (strong buy) stock.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.

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