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Andersons (ANDE) Exits From the Railcar Repair Business
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The Andersons, Inc. (ANDE - Free Report) recently completed the divestment of its railcar repair business to leading freight rail services and transportation company Cathcart Rail. The strategic move supports the company’s final exit from the rail segment, enabling it to focus on and invest in its core farming verticals of grain and fertilizer. ANDE entered into this sell agreement on May 3.
Andersons’ railcar repair network aligns well with Cathcart Rail's goal of expanding its rail services across a national footprint. Cathcart Rail currently operates the largest railcar services network, comprising 18 repair facilities and more than 75 field services locations, with an additional rail services division.
Andersons will utilize the sale proceeds for reducing debts while enhancing the financial position for investment in future growth scopes. The deal strengthens ANDE’s position as North Americas most agile and innovative agricultural supply chain company. Last August, Andersons sold its railcar leasing business to American Industrial Transport, Inc. (AITX) for cash proceeds of $550 million.
In May, the company reported first-quarter 2022 results. Anderson witnessed supply tightness in global fertilizer with rising commodity prices on the back of the Ukraine war. ANDE’s agricultural business outlook remains robust, with crop demand expected to stay high into 2023 and beyond.
The company’s Trade segment includes commodity merchandising and the operation of terminal grain elevator facilities. In the March-end quarter, the segment results were impacted by the decline in corn and soybean basis size due to the extreme run-up in futures prices resulting from the conflict in Ukraine. However, growth in its international supply chain business contributed to the segment’s results. Continued merchandising opportunities and strong elevation margins are expected through the remainder of the year.
Anderson’s Renewables segment produces ethanol and co-products through its five co-owned and fully consolidated ethanol production facilities and purchases and sells ethanol and ethanol co-products. The segment is benefiting from improved margins at all ethanol plants, driving feed and corn oil values.
The Plant Nutrient segment manufactures and distributes agricultural inputs, primarily fertilizer, to dealers and farmers along with turf care and corncob-based products. The segment gained from higher inventory levels and strong margins in the first quarter, offsetting a volume decrease for most of its agricultural fertilizers, particularly within specialty liquids, low-salt starters and wholesale nutrients. With high grain prices and a tight fertilizer supply, the segment will continue to perform well into the second quarter.
Price Performance
Andersons’ shares have gained 6.6% in the past year against the industry's fall of 7.7%.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Andersons currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the basic materials space include American Vanguard Corporation (AVD - Free Report) , Cabot Corporation (CBT - Free Report) and Allegheny Technologies Inc. (ATI - Free Report) .
American Vanguard has a projected earnings growth rate of 72.1% for the current year. The Zacks Consensus Estimate for AVD’s current-year earnings has been revised 17% upward in the past 60 days. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
American Vanguard’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 33.9%. AVD has rallied roughly 36.7% in the past six months. The company flaunts a Zacks Rank #1.
Cabot, currently carrying a Zacks Rank #1, has an expected earnings growth rate of 22.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 6% upward in the past 60 days.
Cabot's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 16.2%. CBT has gained around 12.9% in the past six months.
Allegheny has a projected earnings growth rate of 1,076.9% for the current year. The Zacks Consensus Estimate for ATI's current-year earnings has been revised upward by 40.4% in the past 60 days.
Allegheny's earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 128.9%. ATI has gained around 17.5% in the past six months. It currently sports a Zacks Rank #1.
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Andersons (ANDE) Exits From the Railcar Repair Business
The Andersons, Inc. (ANDE - Free Report) recently completed the divestment of its railcar repair business to leading freight rail services and transportation company Cathcart Rail. The strategic move supports the company’s final exit from the rail segment, enabling it to focus on and invest in its core farming verticals of grain and fertilizer. ANDE entered into this sell agreement on May 3.
Andersons’ railcar repair network aligns well with Cathcart Rail's goal of expanding its rail services across a national footprint. Cathcart Rail currently operates the largest railcar services network, comprising 18 repair facilities and more than 75 field services locations, with an additional rail services division.
Andersons will utilize the sale proceeds for reducing debts while enhancing the financial position for investment in future growth scopes. The deal strengthens ANDE’s position as North Americas most agile and innovative agricultural supply chain company. Last August, Andersons sold its railcar leasing business to American Industrial Transport, Inc. (AITX) for cash proceeds of $550 million.
In May, the company reported first-quarter 2022 results. Anderson witnessed supply tightness in global fertilizer with rising commodity prices on the back of the Ukraine war. ANDE’s agricultural business outlook remains robust, with crop demand expected to stay high into 2023 and beyond.
The company’s Trade segment includes commodity merchandising and the operation of terminal grain elevator facilities. In the March-end quarter, the segment results were impacted by the decline in corn and soybean basis size due to the extreme run-up in futures prices resulting from the conflict in Ukraine. However, growth in its international supply chain business contributed to the segment’s results. Continued merchandising opportunities and strong elevation margins are expected through the remainder of the year.
Anderson’s Renewables segment produces ethanol and co-products through its five co-owned and fully consolidated ethanol production facilities and purchases and sells ethanol and ethanol co-products. The segment is benefiting from improved margins at all ethanol plants, driving feed and corn oil values.
The Plant Nutrient segment manufactures and distributes agricultural inputs, primarily fertilizer, to dealers and farmers along with turf care and corncob-based products. The segment gained from higher inventory levels and strong margins in the first quarter, offsetting a volume decrease for most of its agricultural fertilizers, particularly within specialty liquids, low-salt starters and wholesale nutrients. With high grain prices and a tight fertilizer supply, the segment will continue to perform well into the second quarter.
Price Performance
Andersons’ shares have gained 6.6% in the past year against the industry's fall of 7.7%.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Andersons currently carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the basic materials space include American Vanguard Corporation (AVD - Free Report) , Cabot Corporation (CBT - Free Report) and Allegheny Technologies Inc. (ATI - Free Report) .
American Vanguard has a projected earnings growth rate of 72.1% for the current year. The Zacks Consensus Estimate for AVD’s current-year earnings has been revised 17% upward in the past 60 days. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
American Vanguard’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 33.9%. AVD has rallied roughly 36.7% in the past six months. The company flaunts a Zacks Rank #1.
Cabot, currently carrying a Zacks Rank #1, has an expected earnings growth rate of 22.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 6% upward in the past 60 days.
Cabot's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 16.2%. CBT has gained around 12.9% in the past six months.
Allegheny has a projected earnings growth rate of 1,076.9% for the current year. The Zacks Consensus Estimate for ATI's current-year earnings has been revised upward by 40.4% in the past 60 days.
Allegheny's earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 128.9%. ATI has gained around 17.5% in the past six months. It currently sports a Zacks Rank #1.