Why Andersons Shares Dropped Then Rebounded
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 The Andersons , a diversified farm products company, shot lower by as much as 10%, following the release of its fourth-quarter earnings report, only to claw its way back to a loss of just 1% as of this writing.
So what: For the quarter, Andersons showed robust sales growth of 29%, to $1.68 billion, yet EPS declined by 32% from the prior year to just $0.80. The $1.68 billion in sales was well ahead of the $1.42 billion predicted by analysts, but EPS fell $0.09 shy of the $0.89 estimate. Andersons's rail and plant nutrient group offered the biggest year-over-year gains, while its grain and ethanol segment dragged down its profits, despite the overall bump in revenue. Andersons placed a lot of the blame on the record drought experienced last year for its weaker income.
Now what: I admit to not being a big fan of Andersons in year's past, but that's quickly changing due to its solid business diversification, as well as the fact that weather patterns should normalize from the anomalous dry spell we encountered last year. Even with a record drought, Anderson's earned $4.23 for the year and, I figure, could earn well in excess of $5 if the weather even remotely normalizes and its grain and ethanol production returns to normal levels. Combined with a rapidly-growing rail segment, at just 10 times forward earnings, I'd call this a surprisingly good value.
Craving more input? Start by adding The Andersons to your free and personalized Watchlist, so you can keep up on the latest news with the company.
Is this the markets best kept secret?
The Motley Fool's chief investment officer has selected his number one stock for 2013. Find out which stock it is in our brand-new free report, "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.
The article Why Andersons Shares Dropped Then Rebounded originally appeared on Fool.com.Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.