Ingredion (INGR) – Sweet Emulsion

Ingredion (INGR) is an “ingredients solutions” company. You may not have heard of their brand or what they make, but odds are very high that you have at some point consumed their ingredients as part of another product.  Their lineup includes sweeteners, starches, biomaterials and nutrition ingredients for a wide range of industries manufactured at 41 plants across the globe. The largest geographical segment is North America, primarily USA, with approximately 60% of net sales, followed by South America at 18%.

Credit Suisse thinks that the market is underestimating of Ingredion’s 2016 performance continuing into 2017. Their research notes post-3Q bring forth the following points:

• Strong demand for High-Margin specialty starches from ingredient reformulations towards consumers’ demand for “clean label” products and manufacturers’ cost reduction plans
• Corn sweeteners have increased pricing power from high utilization rates and stronger global sugar prices
• Cost efficiencies in North and South America from plant consolidations (4 Brazilian plants merged into 2)
• Revenue synergies from Penford M&A that has global potential

Ingredion’s 3Q sales grew 3.6% led by Specialty Starches demand increases especially in North America and Asia. Due to political instability and macroeconomic events, South America remains a weak spot, and with 18% of overall revenue generation from this geographical segment it impacts overall nu