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Bear of the Day: The Andersons (ANDE)

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The Andersons, Inc. (ANDE - Free Report) is still struggling to find the right mix in the agribusiness sector. This Zacks Rank #5 (Strong Sell) closed its retail stores but is getting hit as the nutrient business stays depressed.

The Andersons was founded in 1947 by Harold Anderson in Maumee, Ohio with a single grain elevator. It has grown into an agribusiness company with numerous business segments across North America, including in grain, ethanol, plant nutrient and rail.

A Second Quarter Earnings Miss

On Aug 3, The Andersons reported second quarter results and missed on the Zacks Consensus by 11 cents. Earnings were $0.54 compared to the consensus at $0.65.

It saw a net loss of $26.7 million, including $3.5 million in pretax costs associated with exiting its retail business.

The bright spot continues to be the Grain Group with saw significantly improved year-over-year results. The group continued to earn better space income.

Ethanol margins were lower year-over-year as supply outpaced demand.

In the Rail Group, utilization improved sequentially to 84.4% from 83.6% but is still under the year-ago quarter of 88.6%. However, the company is encourage by trends in the railroad industry that show some improvement.

But the Nutrient Group saw the most struggles as margins and volumes suffered due to persistently low prices and fieldwork delays during a key stretch of the primary fertilizer application window. There's no sign that the fertilizer market is going to be turning around soon.

Estimates Cut for 2017 and 2018

The analysts continue to be bearish on The Andersons as long as market conditions remain weak in several of its core areas.

The 2017 Zacks Consensus Estimate was slashed to $1.56 from $1.75 in the last week. While that's an improvement on the $0.41 it made in 2016, it's still down off of earlier bullish projections.

2018 is looking similar as the consensus was cut to $2.21 from $2.35 just 7 days ago.

Shares Hit a 52-Week Low

Given the week quarter, it's not surprising that the shares have sold off on the news.

They are down 30% year-to-date and recently hit a 52-week low.

But are they cheap?

With the falling estimates, The Andersons still trades with a forward P/E of 18.4. That's not in value stock territory.

Investors do get a dividend for their patience. It currently yields about 2%.

If you're interested in investing in the agribusiness side, more than the fertilizer side, then you might want to consider Bunge Limited (BG - Free Report) which has a better Zacks Rank. It's a Zacks Rank #3 (Hold).

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