Why Shares of The Andersons, Inc. Tumbled

Is this meaningful? Or just another movement?

Jeremy Bowman
Jeremy Bowman
May 8, 2014 at 8:35PM

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 The Andersons, (NASDAQ:ANDE) finished down 15% today after turning in a disappointing earnings report last night.  

So what: The diversified agricultural company said sales skidded 21%, to $1 billion, badly missing estimates at $1.34 million, as results in its Grain Group and Plant Nutrient Group were weak, in part due to poor winter weather. Lower grain prices were the primary reason for the sharply lower revenue. The Andersons' bottom line was similarly underwhelming, as earnings per share of $0.80 was well off the $1.04 the Street had expected. 

Now what: Despite the disappointing results, there were some bright spots in the report, as operating income in the Ethanol Group surged on improved ethanol margins, and operating profit from the Rail Group reached a record high of $15 million due to higher lease rates and more income from car sales. Looking ahead, CEO Mike Anderson noted that the Plant Nutrient Group would likely benefit from significant corn crop planting in the second quarter. Much of Andersons' business is subject to volatile outside pricing, so the wide misses should be viewed in that light. A near 30% drop in grain prices seemed to be the main culprit for the shortfall this time around. The Andersons' core business appears to be intact, however, and I'd expect the stock to eventually swing back as outside conditions cooperate.