November 6, 2012
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 agriculture-based conglomerate Andersons (Nasdaq: ANDE ) shot higher by as much as 12% after reporting much better-than-expected third-quarter earnings results.
So what: For the quarter, Andersons reported a 21% increase in revenue over the previous year to $1.14 billion and a profit of $0.90, a 53% improvement over the year-ago quarter. Both results absolutely crushed Wall Street's consensus estimate of $997.2 million in revenue, and a profit of just $0.28. The majority of Andersons' strength came from its rail group, which produced a segment profit of $19.1 million versus just $1.1 million last year. The remaining sectors of Andersons' business were affected negatively by the drought (e.g., grain and ethanol operations).
Now what: I'm still not a fan by any means of ethanol production, but Andersons has a well-diversified business model and a solid management team that understands it's not about three months from now, it's about the long-term picture. A crushing earnings beat, growth by acquisitions, and prudent fiscal management are enough reasons for me to at least add Andersons to My Watchlist.
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