Will Ingredion Continue Positive Earnings Growth in 2Q16?

Analysts are expecting Ingredion’s (INGR) adjusted EPS (earnings per share) for 2Q16 to be $1.65 compared to $1.53 in 2Q15. That’s an increase of 8%.

In the graph below, you can see that the company has beaten analyst expectations in all four quarters of fiscal 2015 and the first quarter of 2016 by a huge margin. Looking at this trend, we can expect INGR’s earnings to beat estimates in 2Q16.

Ingredion announced its raised guidance for fiscal 2016 in its first quarter earnings release. The company now expects the year’s EPS to be $6.45–$6.75. That means it expects EPS to increase 9%–15%. This estimate excludes acquisition-related and restructuring costs.

The following factors are supposed to affect INGR’s 2016 EPS:

• anticipated currency headwinds of $0.30–$0.40
• higher financing costs
• annual tax rate of 30%–32%
• slight rise in corporate expenses

Analysts also expect earnings to increase 7% and 10% in 3Q16 and 4Q16, respectively. That would make earnings growth 14% for fiscal 2016.

Ingredion’s major peers in the packaged food industry include Archer-Daniels Midland (ADM), Bunge (BG), and ConAgra Foods (CAG).

• Archer-Daniels Midland expects EPS for its fiscal 2Q16 to fall by 24%.
• Bunge expects EPS for its fiscal 2Q16 to fall by 23%.
• ConAgra expects EPS for its fiscal 1Q17 to rise by 7%.

To gain exposure to BG, you might consider investing in the Vanguard Consumer Staples ETF (VDC) and the iShares MSCI USA ESG Select (KLD), which invest 1.3% in Bunge.