| Andersons' Results to Suffer on Weakening Ethanol Margin - Analyst Blog | |
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We issued an updated research report on The Andersons Inc. ANDE on Apr 2, 2015. Andersons’ performance will be negatively impacted by lower crude oil price, deterioration in ethanol margin, increased project expense and strong competition.
On Feb 10, 2015, Andersons posted disappointing fourth-quarter 2014 earnings due to lower crude price and rising ethanol inventory. The company maintains a cautious outlook for ethanol margins and expects it to be lower in 2015. Factors impacting current margins include lower crude price, higher ethanol production and marginally rising ethanol stocks. Although the company hedged about 45% of the Jan 2015 ethanol margin risks, it will not match up the record margins reached earlier this year. At the moment, forward margins are not providing Andersons’ any attractive opportunities, hence no further productions have hedged for 2015.
Andersons rolled out the new SAP Financial system company-wide and implemented the new grain system at two locations in May 2014. Consequently, the company’s focus has shifted from development to implementation in 2015; project team size and work effort will remain relatively stable. However, the amount of team effort will be greatly reduced, resulting in higher expense. Project expense, along with the amortization of previously capitalized cost and system support cost is expected to reduce earnings per share by 25—35 cents in 2015, relative to 2014.
Andersons’ businesses are subject to a large number of federal, state and local environmental protection laws and regulations, including laws and regulations relating to air quality, water quality, pesticides and hazardous materials. Grain sold by the company must follow official grade standards imposed under a federal system of grain grading and inspection administered by the United States Department of Agriculture (USDA). Provision of these regulations could require modifications of some of the company's existing facilities and may restrict the expansion of future facilities or significantly increase cost of operations.
Further, global economic downturn and increased competition remain headwinds for Andersons in the near term. The Iowa market is extremely competitive, where the store to production ratio was about 15% higher than most of Andersons’ business areas in 2014. After two years of less than average yields, competition for each bushel has severely restricted ability to earn in the market. Andersons’ retail merchandising business is also highly competitive and will be affected by seasonal factors with significant sales occurring in the spring and during the holiday season.
Moreover, the Zacks Rank #5 (Strong Sell) stock has witnessed downward estimates revision over the last 60 days. The Zacks Consensus Estimate for 2015 and 2016 decreased roughly 20% to $3.07 per share and 8.6% to $3.60 per share, respectively.
Other Stocks that Warrant a Look
Stocks to consider in the same sector include Denison Mines Corp. DNN, Cliffs Natural Resources Inc. CLF and Asanko Gold Inc. AKG. All these stocks hold a Zacks Rank #2 (Buy). Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ANDERSONS INC (ANDE): Free Stock Analysis Report CLIFFS NATURAL (CLF): Free Stock Analysis Report DENISON MINES (DNN): Free Stock Analysis Report ASANKO GOLD INC (AKG): Get Free Report To read this article on Zacks.com click here. Zacks Investment Research
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CLIFFS Natural Resources
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PRODUCTEUR |
CODE : CLF |
ISIN : US18683K1016 |
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ProfilIndicateurs de MarchéVALEUR : Projets & res.Communiqués de PresseRapport annuelRISQUE : Profile actifsContactez la cie |
CLIFFS Natural Res est une société de production minière de fer basée aux Etats-Unis D'Amerique. CLIFFS Natural Res est productrice de fer, de charbon au Bresil, au Canada et en Australie, et détient divers projets d'exploration au Canada. Ses principaux projets en production sont WABUSH MINE, EMPIRE AND TILDEN MINES, HIBBING TACONITE, NORTHSHORE MINE, UNITED TACONITE, OAK GROVE MINE, GREEN RIDGE MINE et PINNACLE MINE au Canada, AUSTRALIAN IRON ORE et SONOMA en Australie et AMAPA au Bresil et ses principaux projets en exploration sont MT JACKSON J1 en Australie et DIAGNOS, WAWA, FREEWEST, MC FAULD'S LAKE, MACFADYEN, WAWA CLAIMS et BIG DADDY au Canada. CLIFFS Natural Res est cotée aux Etats-Unis D'Amerique, en Allemagne et en France. Sa capitalisation boursière aujourd'hui est 5,3 milliards US$ (5,0 milliards €). La valeur de son action a atteint son plus haut niveau récent le 16 mai 2008 à 99,17 US$, et son plus bas niveau récent le 15 janvier 2016 à 1,20 US$. CLIFFS Natural Res possède 297 400 968 actions en circulation. |