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Why Is Andersons (ANDE) Down 6.3% Since the Last Earnings Report?

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About a month has gone by since the last earnings report for The Andersons, Inc. (ANDE - Free Report) . Shares have lost about 6.3% in that time frame, underperforming the market .

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Andersons' Q2 Earnings Miss Estimates, Increase Y/Y

Andersons reported adjusted earnings of $0.54 per share in second-quarter 2017, up 6% year over year. Earnings, however, missed the Zacks Consensus Estimates of $0.65.

Including one-time items, the company posted a loss of $0.94 in the quarter compared to a profit of $0.51 recorded in the year-ago quarter.

Operational Update

Revenues in the reported quarter declined 6.6% year over year to $994 million.

Cost of sales fell 6.3% to $905.8 million from $967.2 million in the prior-year quarter. Gross profit dropped 9.5% year over year to $87.8 million. Consequently, gross margin contracted 30 basis points to 8.8% in the quarter.

Operating, administrative and general expenses were down 7.3% year over year to $70 million. Andersons posted operating profit of $17.9 million in the quarter compared with $21.6 million witnessed in the year-earlier quarter.

Segment Performance

The Grain Group: Revenues dipped 6.6% year over year to $488.4 million from $523 million generated in the year-earlier quarter. The segment reported an operating income of $6.9 million compared to a loss of $13 million incurred in the comparable quarter last year.

The Ethanol Group: Revenues jumped 31.8% year over year to $187.8 million. The segment reported an operating profit of $4.6 million that declined from $7.2 million in the year-ago quarter.

The Plant Nutrient Group: The segment reported revenues of $264.7 million, down 17.3% year over year. The segment reported an operating loss of $25.8 million as against an income of $23.5 million in the comparable period last year.

The Rail Group: Revenues declined 5.4% year over year to $38 million. Operating income descended 10.6% to $5.9 million from $6.6 million in the prior-year quarter.

Retail Group: Revenues plunged significantly to $14.5 million from $38.4 million generated in the year-ago quarter. The segment reported an operating loss of $6.7 million compared with a profit of $1 million in the year-earlier quarter.

Financial Performance

Andersons reported cash and cash equivalents of $18.9 million at the end of second-quarter 2017, down from $31.4 million in the prior-year quarter. Long-term debt was $416.5 million as of Jun 30, 2017, compared with $452.5 million as of Jun 30, 2016.

Andersons substantially completed the process of closing the Retail business during the second quarter. The four stores were closed in early June. Remaining tasks primarily include the sale of the store properties.

How have estimates been moving since then?

Analysts were quiet during the last month as none of them issued any earnings estimate revisions.

The Andersons, Inc. Price and Consensus

 

The Andersons, Inc. Price and Consensus | The Andersons, Inc. Quote

VGM Scores

At this time, The Andersons' stock has a great Growth Score of A, though it is lagging a bit on the momentum front with a B. The stock was allocated also a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.

Outlook

The stock has a Zacks Rank #5 (Strong Sell). We expect below average returns from the stock in the next few months.




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