Is Ingredion Inc. (INGR) Positioned for Growth in the Food Industry?

The food ingredients industry is experiencing growth driven by increasing consumer demand for healthier options. In this favorable environment, Ingredion Inc. (INGR) is strategically positioned to leverage the sector's expanding demands and capitalize on emerging opportunities.

The food ingredients industry is an industry of change. As consumer preferences for what they want to consume keep on changing with the tides of time, the industry needs to keep up with the ever-changing demand patterns to function successfully.

With a rise in healthy eating driven by consumer concerns about gluten, dairy, sugar, and genetically modified organisms (GMOs), the industry for organic food is also on the rise. Plant-based proteins and non-GMO ingredients have quickly gained popularity among many consumers, facilitating the growth of the newly improved food ingredients industry.

In this rapidly evolving environment, INGR stands out as a premier choice for investors. With an extensive portfolio of offerings derived from wet milling and processing corn, and other starch-based materials, the company’s position seems strong.

Its stock has surged 11% over the past nine months and 14.3% over the past year, closing the last trading session at $127.13, signaling the company's strong market position and potential.

Now, let us discuss the factors that could affect the stock’s growth trajectory.

Recent Developments

On February 4, 2025, INGR announced investments of more than $100 million to increase efficiency, modernize equipment, and also install an energy cogeneration system at its Indianapolis facility.

The project aims to expand the company’s capabilities to deliver texture innovations to growing end markets, which could enhance its economic viability and sustainability.

On November 14, 2024, INGR announced a long-term collaboration with Lantmännen, a Northern European agricultural cooperative, to meet the European market’s needs for competitive, sustainably sourced, and high-quality pea protein isolates and various facets of sales, product innovation, and process enhancement.

The partnership could help expand INGR’s footprint in the European market and could solidify its position as a global leader in the plant-based protein industry.

Stable Historical Growth

Over the past three years, INGR has demonstrated consistent growth across key financial metrics. Its revenue and EBITDA grew at a CAGR of 3.9% and 6.6%, respectively. Moreover, net income and EPS expanded at a CAGR of 60.6% and 61.5% over the same period.

Sound Financials

For the fiscal 2024 fourth quarter that ended December 31, INGR’s net sales amounted to $1.80 billion. Its non-GAAP adjusted operating income rose 22.2% from the year-ago value to $248 million.

Moreover, non-GAAP adjusted net income and non-GAAP adjusted EPS attributable to INGR increased 34.4% and 33.5% from the prior year’s quarter to $176 million and $2.63, respectively. As of December 31, 2024, INGR’s cash and cash equivalents amounted to $997 million, compared to $401 million on December 31, 2023.

Optimistic Analyst Estimates

Analysts expect INGR’s revenue and EPS for the fiscal 2025 first quarter (ending in March) to increase 1.6% and 20.6% year-over-year to $1.91 billion and $2.51, respectively. In addition, the company exceeded the consensus EPS estimates in each of the four trailing quarters, which is impressive.

Looking at the full fiscal year ending December 2025, INGR’s revenue and EPS are expected to rise 2% and 5.5% from the prior year to $7.58 billion and $11.23, respectively.

Robust Profitability

INGR’s trailing-12-month EBIT margin of 13.59% is 42.6% higher than the industry average of 9.54%. Its trailing-12-month EBITDA margin stands at 16.47%, 26.2% higher than the industry average of 13.05%.

In addition, the company boasts a trailing-12-month net income margin of 8.71%, which is 102.6% higher than the sector average of 4.30%. Also, the stock’s trailing-12-month levered FCF margin of 15.23% is 163.8% higher than the industry average of 5.77%.

Discounted Valuation

INGR is currently trading at a forward non-GAAP P/E of 11.32x, which is 29.7% lower than the industry average of 16.10x. Moreover, the stock’s forward EV/EBIT multiple stands at 8.36, 40.7% lower than the industry average of 14.10x.

Additionally, it has a forward Price/Sales multiple of 1.08, which is 11.9% lower than the industry average of 1.23x. This indicates that INGR is undervalued compared to its peers, offering potential upside for investors.

POWR Ratings Reflects Optimism

INGR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

INGR has a B grade for Value, driven by its discounted valuation metrics relative to the industry average. Moreover, the stock has a B for Growth, which is in line with its impressive historical growth. Additionally, the stock earns a B for Quality, in line with its higher-than-average profitability metrics.

Within the B-rated Food Makers industry, INGR is ranked #2 out of 74 stocks. Beyond what is stated above, we have also given INGR grades for Momentum, Sentiment, and Stability. Get all INGR ratings here.

Bottom Line

INGR has established itself as a top-of-the-line choice in the food ingredients sector owing to its extensive range of products that readily keep up with growing consumer needs. Looking at the company's recent investments to increase efficiency and its expansion into the European markets, signaling worldwide reach, its future growth seems robust.

Given INGR’s attractive valuation, high profitability, and impressive historical growth, now could be the ideal time to consider adding the stock to one’s portfolio.

How Does Ingredion Incorporated (INGR) Stack Up Against Its Peers?

Although INGR’s near-term outlook appears sound, it may be worthwhile to explore its industry peers, who also exhibit strong POWR Ratings. So, consider these A (Strong Buy) rated stocks from the Food Makers industry:

Sysco Corporation (SYY)

US Foods Holding Corp. (USFD)

BRF S.A. (BRFS)

To explore more A or B-rated Food Makers stocks, click here.

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INGR shares were unchanged in premarket trading Wednesday. Year-to-date, INGR has declined -7.04%, versus a 2.68% rise in the benchmark S&P 500 index during the same period.

Aritra is a financial journalist dedicated to breaking down complex financial topics into simple, actionable insights. Holding a Master’s degree in Economics, he uses his analytical expertise to help investors uncover unique opportunities for long-term success.

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