Recent dividend declared
Ingredion (INGR) raised its quarterly dividends by 7% and repurchased ~70,000 shares during fiscal 3Q15. One month before the fiscal 4Q15 earnings release, the company approved a dividend of $0.45 per share. This will be paid on January 25, 2016, to stockholders of record at the close of business on December 31, 2015.
For 2015, the company gave a total of $1.71 per share to shareholders in the form of dividends. Ingredion had a dividend yield of 2.0% as of January 20, 2016. Note that management has raised the dividend at an average annual rate of 29% over the last five years.
Fiscal 2015 guidance
During Ingredion’s fiscal 3Q15 release, the company provided the annual guidance for fiscal 2015. It raised its EPS (earnings per share) guidance range to $5.75–$5.90 per share. An anticipated impact of $0.08–$0.12 EPS accretion from the Penford and Kerr acquisitions is included in the new guidance.
However, that excludes any acquisition-related and restructuring costs. The Kerr acquisition is likely to have a neutral effect on EPS this year. An effective tax rate of ~32% and EPS accretion attributable to the 2014 accelerated share repurchase program are also included in the guidance.
The net revenue is expected to be the same compared to 2014. However, volumes might rise along with continued growth in specialty volumes. The annual guidance for fiscal 2015 assumes an overall enhancement in the North America segment and modest improvement in Asia-Pacific compared to the previous year. The EMEA (Europe, the Middle East, and Africa) segment is anticipated to fall owing to unfavorable changes in currency rates while the South America segment’s performance is expected to be in line with the previous year.
Sales of higher-value specialty ingredients are expected to continue to contribute to the company’s margin expansion. In fiscal 2015, the cash generated by operations is supposed to be in the range of ~$650 million to $700 million, and capital expenditures are expected at $300 million.
Ingredion’s main competitors in the industry include General Mills (GIS), Pinnacle Foods (PF) and McCormick (MKC). They reported operating profits of $906 million, $100 million, and $139 million, respectively, for their last reported quarters. The Guggenheim S&P Equal Weight Consumer Staples ETF (RHS) and the PowerShares S&P 500 High-Quality Portfolio (SPHQ) invest 2.7% and 1.3%, respectively, of their holdings in the MKC stock.