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Andersons (ANDE) Down 2.1% Since Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for The Andersons, Inc. . Shares have lost about 2.1% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is ANDE due for a breakout? Before we dive into how investors and analysts have reacted as 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 Posts Loss in Q1, Quits Retail Business

Andersons reported a loss of 6 cents per share in first-quarter 2018, narrower than the loss of 11 cents per share posted in the year-ago quarter. Notably, the loss in the reported quarter resulted from unallocated corporate expenses.

The loss incurred in the quarter was in contrast with the Zacks Consensus Estimate for the quarter, which was pegged at earnings of 8 cents per share.

Operational Update

Revenues in the reported quarter fell around 25% year over year to $636 million.  The decline was due to the adoption of new revenue recognition rules that changed the treatment of a significant amount of Grain Group's sales transactions.

Cost of sales fell 26% to $572 million from $776 million posted in the prior-year quarter. Gross profit dropped 16.7% year over year to $63.7 million. However, gross margin expanded 100 basis points to 10% in the quarter.

Operating, administrative and general expenses were down 21% year over year to $64.3 million. Andersons reported an operating loss of $0.6 million in the first quarter compared to a loss of $5.1 million recorded in the year-earlier quarter.

Segment Performance

In January 2017, Andersons announced its decision to close all retail operations. As of Mar 31, 2018, the Retail Group has closed all stores and completed its liquidation efforts. Thus, the company will report results in four business segments from now.

The Grain Group: Revenues plummeted 42% year over year to $277 million from $479 million generated in the year-earlier quarter. The segment reported an operating loss of $0.03 million compared with a loss of $5 million posted in the comparable quarter last year.

The Ethanol Group: Revenues jumped 12% year over year to $173 million. The segment reported an operating profit of $1.8 million, a 7% increase year over year from $1.7 million recorded in the year-ago quarter.

The Plant Nutrient Group: The segment reported revenues of $136 million, down around 7.5% year over year. It reported an operating profit of $1.1 million, which was significantly down from $6.7 million recorded in first-quarter 2017.

The Rail Group: Revenues at this segment went up 25% year over year to $50.4 million. Operating income plunged 35% to $4 million from $6 million recorded in the prior-year quarter.

Financial Performance

Andersons reported cash and cash equivalents of $31.5 million at the end of the first quarter, up from $29.6 million reported at the end of the prior-year quarter. Its long-term debt was $453 million as of Mar 31, 2018, compared with $422 million as of Mar 31, 2017.

Andersons anticipates that its Plant Nutrient Group will deliver a strong performance in second-quarter 2018, driven by improved volume and margin in the lawn business. However, the impact of ongoing weather challenges will affect the specialty nutrients business.

Further, Andersons’ Ethanol Group began construction of a world class bio-refinery in Kansas, in partnership with ICM, Inc. The company expects this facility to be fully operational by the end of 2019.

How Have Estimates Been Moving Since Then?

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

The Andersons, Inc. Price and Consensus

VGM Scores

At this time, ANDE has a poor Growth Score of F, however its Momentum is doing a lot better with a C. Following the exact same course, the stock was allocated 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

Zacks' style scores indicate that the company's stock is suitable for value and momentum investors.


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

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