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Can Darling Ingredients' Portfolio Reset Drive Long-Term Growth?
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Key Takeaways
DAR sold its CTH-branded sausage casings business to SARIA for an undisclosed amount.
The CTH sale supports DAR's efforts to simplify its portfolio and reduce debt.
DAR cut net debt by $223 million in Q2 and targets year-end leverage below 2.0X.
Darling Ingredients Inc. (DAR - Free Report) continues to streamline the portfolio as it focuses capital on businesses offering stronger integration and longer-term value creation. The company has completed the sale of its CTH-branded sausage casings business to SARIA for an undisclosed amount. The transaction reflects Darling Ingredients’ ongoing effort to optimize its portfolio, simplify the business mix and use divestiture proceeds to support further debt reduction.
The timing also aligns with Darling Ingredients’ balance-sheet priorities. During the second quarter, the company reduced net debt by $223 million and ended the period with a preliminary leverage ratio of 2.3X, compared with 2.9X at the start of 2026. Further supporting this effort, Darling Ingredients closed the sale of a majority of its trap business on July 22 for approximately $90 million. Darling Ingredients is targeting year-end net debt at or below $3 billion and a leverage ratio below 2X, with divestiture proceeds potentially helping advance that goal.
The CTH transaction further sharpens Darling Ingredients’ portfolio by directing greater focus toward businesses offering stronger integration and long-term value creation potential. This move also supports the company’s broader portfolio-optimization strategy and disciplined approach to capital allocation.
Meanwhile, Darling Ingredients’ Food Ingredients business remains supported by improving fundamentals. In the second quarter, segment sales increased 5.8% to $408.5 million, while adjusted EBITDA rose 55.1% to $108.5 million from $69.9 million a year earlier. The improvement was supported by stronger global collagen demand and expanding applications across food, nutrition and health products. These trends provide a firmer operating backdrop as Darling Ingredients continues to improve the Food Ingredients mix toward higher-value collagen and targeted health applications.
Shares of this Zacks Rank #3 (Hold) company have gained 8.3% in the past three months against the broader Consumer Staples sector and the industry’s decline of 6.1% and 5.7%, respectively. DAR has also outperformed the S&P 500 index’s growth of 1.6% during the same period.
DAR Stock's Past Three Months Performance
Image Source: Zacks Investment Research
Is DAR a Value Play Stock?
Darling Ingredients currently trades at a forward 12-month P/E ratio of 9.11, which is down from the industry average of 13.51 and notably below the sector average of 15.99. This valuation positions the stock at a modest discount relative to both its direct peers and the broader consumer staples sector.
DAR P/E Ratio (Forward 12 Months)
Image Source: Zacks Investment Research
Stocks to Consider
The Chefs' Warehouse, Inc. (CHEF - Free Report) distributes specialty food and center-of-the-plate products in the United States, the Middle East and Canada. At present, CHEF flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Chefs' Warehouse’s current fiscal-year sales and earnings implies growth of 10.8% and 33.7%, respectively, from the year-ago reported figures. Chefs' Warehouse delivered a trailing four-quarter earnings surprise of 30.4%, on average.
Mama's Creations, Inc. (MAMA - Free Report) manufactures and markets fresh deli-prepared foods in the United States. At present, MAMA holds a Zacks Rank of 2 (Buy). Mama's Creations delivered a trailing four-quarter earnings surprise of 121.7%, on average.
The consensus estimate for Mama's Creations’ current fiscal-year sales and earnings implies growth of 30.3% and 66.7%, respectively, from the year-ago figures.
Utz Brands (UTZ - Free Report) engages in the manufacture, marketing and distribution of snack foods in the United States. It presently carries a Zacks Rank of 2. UTZ delivered a trailing four-quarter earnings surprise of 1.8%, on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year sales indicates growth of 3.7% from the year-ago numbers.
View the Zacks #1 Rank List
Image: Bigstock
Can Darling Ingredients' Portfolio Reset Drive Long-Term Growth?
Key Takeaways
Darling Ingredients Inc. (DAR - Free Report) continues to streamline the portfolio as it focuses capital on businesses offering stronger integration and longer-term value creation. The company has completed the sale of its CTH-branded sausage casings business to SARIA for an undisclosed amount. The transaction reflects Darling Ingredients’ ongoing effort to optimize its portfolio, simplify the business mix and use divestiture proceeds to support further debt reduction.
The timing also aligns with Darling Ingredients’ balance-sheet priorities. During the second quarter, the company reduced net debt by $223 million and ended the period with a preliminary leverage ratio of 2.3X, compared with 2.9X at the start of 2026. Further supporting this effort, Darling Ingredients closed the sale of a majority of its trap business on July 22 for approximately $90 million. Darling Ingredients is targeting year-end net debt at or below $3 billion and a leverage ratio below 2X, with divestiture proceeds potentially helping advance that goal.
The CTH transaction further sharpens Darling Ingredients’ portfolio by directing greater focus toward businesses offering stronger integration and long-term value creation potential. This move also supports the company’s broader portfolio-optimization strategy and disciplined approach to capital allocation.
Meanwhile, Darling Ingredients’ Food Ingredients business remains supported by improving fundamentals. In the second quarter, segment sales increased 5.8% to $408.5 million, while adjusted EBITDA rose 55.1% to $108.5 million from $69.9 million a year earlier. The improvement was supported by stronger global collagen demand and expanding applications across food, nutrition and health products. These trends provide a firmer operating backdrop as Darling Ingredients continues to improve the Food Ingredients mix toward higher-value collagen and targeted health applications.
Darling Ingredients’ Zacks Rank & Share Price Performance
Shares of this Zacks Rank #3 (Hold) company have gained 8.3% in the past three months against the broader Consumer Staples sector and the industry’s decline of 6.1% and 5.7%, respectively. DAR has also outperformed the S&P 500 index’s growth of 1.6% during the same period.
DAR Stock's Past Three Months Performance
Image Source: Zacks Investment Research
Is DAR a Value Play Stock?
Darling Ingredients currently trades at a forward 12-month P/E ratio of 9.11, which is down from the industry average of 13.51 and notably below the sector average of 15.99. This valuation positions the stock at a modest discount relative to both its direct peers and the broader consumer staples sector.
DAR P/E Ratio (Forward 12 Months)
Image Source: Zacks Investment Research
Stocks to Consider
The Chefs' Warehouse, Inc. (CHEF - Free Report) distributes specialty food and center-of-the-plate products in the United States, the Middle East and Canada. At present, CHEF flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Chefs' Warehouse’s current fiscal-year sales and earnings implies growth of 10.8% and 33.7%, respectively, from the year-ago reported figures. Chefs' Warehouse delivered a trailing four-quarter earnings surprise of 30.4%, on average.
Mama's Creations, Inc. (MAMA - Free Report) manufactures and markets fresh deli-prepared foods in the United States. At present, MAMA holds a Zacks Rank of 2 (Buy). Mama's Creations delivered a trailing four-quarter earnings surprise of 121.7%, on average.
The consensus estimate for Mama's Creations’ current fiscal-year sales and earnings implies growth of 30.3% and 66.7%, respectively, from the year-ago figures.
Utz Brands (UTZ - Free Report) engages in the manufacture, marketing and distribution of snack foods in the United States. It presently carries a Zacks Rank of 2. UTZ delivered a trailing four-quarter earnings surprise of 1.8%, on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year sales indicates growth of 3.7% from the year-ago numbers.