Why Ingredion Shares Dropped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Ingredion were down as much as 10% today after the ingredient seller cut its full-year and current-quarter EPS forecast.
So what: The maker of starch and sweetener ingredients such as corn syrup said it would reduce its EPS guidance for the year from $5.60-$6 down to $5.10-$5.40 on lower margins from Argentina. The current quarter's per-share earnings, meanwhile, are expected to come in at $1.15-$1.20, below the analyst consensus at $1.32. The company blamed slower growth in Argentina as well as local laws prohibiting it from passing on higher raw material prices to customers, and CEO Ilene Gordon called Argentina "a severe situation."
Now what: Management cited additional problems in South America for the cutbacks, including slower-than-expected growth in Brazil, and also acknowledged "slower volume recovery" in North America. The company did, however, stand by its long-term EPS CAGR goal of 10% to 12%. Some of these problems seem like temporary setbacks, such as market conditions in the Americas; however, issues with government policies and competition from low-cost sugar alternatives may be more difficult to overcome. This doesn't look like a reason to sell for now, but you'll want to stay on top of this story to see if it has a continuing impact. Just add the company to your Watchlist by clicking here.
The article Why Ingredion Shares Dropped originally appeared on Fool.com.Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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