Market Capitalization $9.7 Billion

Transcription

1 BUY HOLD SELL A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F Annual Dividend Rate BUY BUY RATING SINCE 11/22/2010 TARGET PRICE $ BUSINESS DESCRIPTION Ingredion Incorporated, together with its subsidiaries, produces and sells starches and sweeteners for various industries. The company operates through four segments: North America, South America, Asia Pacific and Europe, and Middle East and Africa. STOCK PERFORMANCE (%) 3 Mo. 1 Yr. 3 Yr (Ann) Price Change GROWTH (%) Last Qtr 12 Mo. 3 Yr CAGR Revenues Net Income EPS RETURN ON EQUITY (%) Ind Avg S&P 500 Q Q Q Sector: Consumer Non-Discretionary Sub-Industry: Agricultural Products Source: S&P Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years Rating History BUY Volume in Millions COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History TARGET PRICE $ P/E COMPARISON RECOMMENDATION We rate () a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year, growth in earnings per share and increase in net income. We feel its strengths outweigh the fact that the company shows operating cash flow Ind Avg S&P 500 HIGHLIGHTS The revenue growth came in higher than the industry average of 12.6%. Since the same quarter one year prior, revenues slightly increased by 0.2%. Growth in the company's revenue appears to have helped boost the earnings per share. EPS ANALYSIS¹ ($) The debt-to-equity ratio is somewhat low, currently at 0.67, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.50, which illustrates the ability to avoid short-term cash problems. Q Q Q Q Q Q Q NA = not available NM = not meaningful Q Q Q Q Compustat fiscal year convention is used for all fundamental data items. The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year. has improved earnings per share by 17.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, increased its bottom line by earning $6.54 versus $5.52 in the prior year. This year, the market expects an improvement in earnings ($7.71 versus $6.54). The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Food Products industry average. The net income increased by 16.1% when compared to the same quarter one year prior, going from $ million to $ million. PAGE 1

2 PEER GROUP ANALYSIS REVENUE GROWTH AND EBITDA MARGIN* Revenue Growth (TTM) -25% 20% UNFAVORABLE RKDA -400% EBITDA Margin (TTM) FAVORABLE DAR BG SANW LND LMNR FDP ADM ALCO 50% Companies with higher EBITDA margins and revenue growth rates are outperforming companies with lower EBITDA margins and revenue growth rates. Companies for this scatter plot have a market capitalization between $9.4 Million and $21.9 Billion. Companies with NA or NM values do not appear. *EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization. REVENUE GROWTH AND EARNINGS YIELD Revenue Growth (TTM) -25% 20% UNFAVORABLE RKDA -200% Earnings Yield (TTM) LMNR LND FAVORABLE DAR FDP ALCO SEED BG ADM SANW 25% Companies that exhibit both a high earnings yield and high revenue growth are generally more attractive than companies with low revenue growth and low earnings yield. Companies for this scatter plot have revenue growth rates between -23.6% and 19.5%. Companies with NA or NM values do not appear. INDUSTRY ANALYSIS The US food products industry is dominated by a few multinational corporations like Mondelez International (MDLZ), General Mills (GIS), and Kellogg (K). The entire industry, from growing to processing, is extremely competitive and margins are typically so low that earning profit becomes a challenge. The worldwide processed food industry is facing low growth rates, high energy costs and continuously changing consumer preferences. Nonetheless, there are a few high growth segments, like health, frozen, and organic food. Globalization has led to the rise of massive multinational food processing companies, which sell their products under local names in local languages after producing them in regional factories. Taste, convenience and health continue to be the primary drivers of food choices. Growing popularity of ethnic food, including Greek, Latin, Asian, Korean, Cuban, and Japanese foods, is expected to drive demand. Increasing health concerns are impacting all sectors within the industry as obesity levels continue to rise to alarming rates. Various branches of the US government, including the Food and Drug Administration (FDA), along with a host of consumer groups are squaring off with food producers over nutrition and the responsibilities and ethical issues inherent in the production and marketing of food. The treatment of agricultural animals is rapidly gaining consumer awareness and has forced a realignment of research methods. The industry is being squeezed from all sides. Prices for milk, eggs, corn, wheat, oils and almost all other edible commodities continue to surge. The prices of electricity and fuel are also increasing, making processing and distribution more expensive. With high international unemployment, modest inflation and slow economic growth, passing on the entire price hike to consumers is not an option with apprehensions of substantially reducing overall demand. Brand value is gaining prominence among producers as demand is declining. Factors contributing to the rise in prices include high feed prices caused by ethanol demand, less inventory with heifer calves being retained and a possible increase in demand for exports due to a depreciating dollar. Multinational companies with diversified customer bases are best positioned to overcome this high-price/low-demand trend. NestlÃ, the world's biggest food firm, and Kraft, one of America's biggest food firms, fit this description. We expect higher input costs to negatively impact margins, leading manufacturers to seek greater production and supply-chain efficiencies. Increased awareness and acceptance of rising food prices should lead to greater home-dining trends, stimulating brand building and niche market initiatives at major food processors. These issues, among others, will drive industry trends and M&A activity going forward. PEER GROUP: Food Products Recent Market Price/ Net Sales Net Income Ticker Company Name Price ($) Cap ($M) Earnings TTM ($M) TTM ($M) , , BG BUNGE LTD , , RKDA ARCADIA BIOSCIENCES INC NM SANW S&W SEED CO NM LMNR LIMONEIRA CO SEED ORIGIN AGRITECH LTD NM DAR DARLING EDIENTS INC , , ALCO ALICO INC FDP FRESH DEL MONTE PRODUCE INC , , ADM ARCHER-DANIELS-MIDLAND CO , , , LND BRASILAGRO CIA BRAS DE PROP The peer group comparison is based on Major Agricultural Products companies of comparable size. PAGE 2

3 Annual Dividend Rate COMPANY DESCRIPTION Ingredion Incorporated, together with its subsidiaries, produces and sells starches and sweeteners for various industries. The company operates through four segments: North America, South America, Asia Pacific and Europe, and Middle East and Africa. It offers sweetener products comprising glucose syrups, high maltose syrups, high fructose corn syrups, caramel colors, dextrose, polyols, maltodextrins and glucose, and syrup solids, as well as food-grade and industrial starches, and biomaterials. The company also provides animal feed products; edible corn oil; refined corn oil to packers of cooking oil and to producers of margarine, salad dressings, shortening, mayonnaise, and other foods; and corn gluten feed used as protein feed for chickens, pet food, and aquaculture. Its products are derived primarily from processing corn and other starch-based materials, such as tapioca, potato, and rice. The company serves food, beverage, paper and corrugating products, brewing, pharmaceutical, textile, and personal care industries, as well as animal feed and corn oil markets. The company was formerly known as Corn Products International, Inc. and changed its name to Ingredion Incorporated in June Ingredion Incorporated was founded in 1906 and is headquartered in Westchester, Illinois. 5 Westbrook Corporate Center Westchester, IL USA Phone: STOCK-AT-A-GLANCE Below is a summary of the major fundamental and technical factors we consider when determining our overall recommendation of shares. It is provided in order to give you a deeper understanding of our rating methodology as well as to paint a more complete picture of a stock's strengths and nesses. It is important to note, however, that these factors only tell part of the story. To gain an even more comprehensive understanding of our stance on the stock, these factors must be assessed in combination with the stock s valuation. Please refer to our Valuation section on page 5 for further information. FACTOR SCORE Growth 4.5 out of 5 stars Measures the growth of both the company's income statement and cash flow. On this factor, has a growth score better than 80% of the stocks we rate. Total Return 4.5 out of 5 stars Measures the historical price movement of the stock. The stock performance of this company has beaten 80% of the companies we cover. Efficiency 4.5 out of 5 stars Measures the strength and historic growth of a company's return on invested capital. The company has generated more income per dollar of capital than 80% of the companies we review. Price volatility 5.0 out of 5 stars Measures the volatility of the company's stock price historically. The stock is less volatile than 90% of the stocks we monitor. Solvency 4.5 out of 5 stars Measures the solvency of the company based on several ratios. The company is more solvent than 80% of the companies we analyze. Income 3.5 out of 5 stars Measures dividend yield and payouts to shareholders. The company's dividend is higher than 60% of the companies we track. THESTREET RATINGS RESEARCH METHODOLOGY TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates. While our model is quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings. Objective elements include volatility of past operating revenues, financial strength, and company cash flows. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's performance. These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. PAGE 3

4 Consensus EPS Estimates² ($) IBES consensus estimates are provided by Thomson Financial FINANCIAL ANALYSIS 's gross profit margin for the third quarter of its fiscal year 2017 has increased when compared to the same period a year ago. The company managed to grow both sales and net income at a faster pace than the average competitor in its industry this quarter as compared to the same quarter a year ago. has average liquidity. Currently, the Quick Ratio is 1.50 which shows that technically this company has the ability to cover short-term cash needs. The company's liquidity has decreased from the same period last year, indicating deteriorating cash flow Q4 FY E 2017(E) 8.34 E 2018(E) During the same period, stockholders' equity ("net worth") has increased by 10.97% from the same quarter last year. Together, the key liquidity measurements indicate that it is relatively unlikely that the company will face financial difficulties in the near future. INCOME STATEMENT Net Sales ($mil) 1, , EBITDA ($mil) EBIT ($mil) Net Income ($mil) STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. To learn more visit BALANCE SHEET Cash & Equiv. ($mil) Total Assets ($mil) 5, , Total Debt ($mil) 1, , Equity ($mil) 2, , PROFITABILITY Gross Profit Margin 33.67% 31.89% EBITDA Margin 18.36% 17.25% Operating Margin 14.99% 14.07% Sales Turnover Return on Assets 8.72% 8.87% Return on Equity 18.15% 19.39% DEBT Current Ratio Debt/Capital Interest Expense NA NA Interest Coverage NA NA SHARE DATA Shares outstanding (mil) Div / share EPS Book value / share Institutional Own % NA NA Avg Daily Volume 330, ,021 2 Sum of quarterly figures may not match annual estimates due to use of median consensus estimates. PAGE 4

5 RATINGS HISTORY Our rating for has not changed since 4/23/2010. As of 11/22/2017, the stock was trading at a price of which is.5% below its 52-week high of $ and 19.4% above its 52-week low of $ Year Chart BUY: $ $140 $120 $100 MOST RECENT RATINGS CHANGES Date Price Action From To 11/20/15 $96.06 No Change Buy Buy Price reflects the closing price as of the date listed, if available RATINGS DEFINITIONS & DISTRIBUTION OF THESTREET RATINGS (as of 11/22/2017) 44.02% Buy - We believe that this stock has the opportunity to appreciate and produce a total return of more than 10% over the next 12 months % Hold - We do not believe this stock offers conclusive evidence to warrant the purchase or sale of shares at this time and that its likelihood of positive total return is roughly in balance with the risk of loss % Sell - We believe that this stock is likely to decline by more than 10% over the next 12 months, with the risk involved too great to compensate for any possible returns. TheStreet Ratings 14 Wall Street, 15th Floor New York, NY Research Contact: Sales Contact: VALUATION BUY. This stock's P/E ratio indicates a discount compared to an average of for the Food Products industry and a discount compared to the S&P 500 average of To use another comparison, its price-to-book ratio of 3.43 indicates valuation on par with the S&P 500 average of 3.17 and a discount versus the industry average of The price-to-sales ratio is well below both the S&P 500 average and the industry average, indicating a discount. Upon assessment of these and other key valuation criteria, proves to trade at a discount to investment alternatives within the industry. Price/Earnings Peers Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations. is trading at a significant discount to its peers. Price/Projected Earnings Peers Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations. is trading at a discount to its peers. Price/Book 3.43 Peers 4.50 Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet. is trading at a discount to its peers. Price/Sales 1.58 Peers 2.13 Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales. is trading at a significant discount to its industry on this measurement. DISCLAIMER: Price/CashFlow Peers Discount. The P/CF ratio, a stock s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures. is trading at a significant discount to its peers. Price to Earnings/Growth 1.09 Peers 1.18 Average. The PEG ratio is the stock s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples. trades at a valuation on par to its peers. Earnings Growth lower higher 4.17 Peers Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios. However, is expected to significantly trail its peers on the basis of its earnings growth rate. Sales Growth lower higher 1.86 Peers 0.49 Higher. A sales growth rate that exceeds the industry implies that a company is gaining market share. has a sales growth rate that significantly exceeds its peers. The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided via the COMPUSTAT Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as other third-party data providers. TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a qualified securities professional, before you make any investment. None of the information contained in this report constitutes, or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at PAGE 5