A Look at Darling Ingredients’s Valuation After Strong Q3 Revenue Beat and Upgraded Guidance

Darling Ingredients (DAR) delivered an encouraging set of third-quarter results, topping revenue forecasts as its core ingredients business accelerated. Along with stronger sales, the company raised guidance and unveiled plans to sell production tax credits.

See our latest analysis for Darling Ingredients.

The upbeat revenue news sparked a sharp rally, with a 9% share price return in just the last week as investors welcomed signs of turnaround in the core ingredients business. However, despite this burst of momentum, Darling Ingredients’ total shareholder return over the past year remains down nearly 12%, which highlights that the longer-term performance has yet to match the recent optimism.

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Given the company’s surge in momentum but continued long-term underperformance, is Darling Ingredients now trading at a discount as a turnaround gathers steam? Or is the market already factoring in all of its future growth potential?

Most Popular Narrative: 25.2% Undervalued

Darling Ingredients’ consensus fair value sits well above the last closing price, signalling analysts see more room for the stock to climb. With future expectations heavily influencing this estimate, let’s explore one of the core reasons behind this valuation.

Ongoing expansion into high-growth, high-margin specialty ingredients via the Nextida JV and rising global demand for health & wellness products (e.g., collagen, functional peptides), backed by scientific validation and early repeat orders, is expected to meaningfully broaden Darling's product portfolio, diversify revenues, and drive Food segment EBITDA growth starting in 2026.

Read the complete narrative.

Curious how bold global ambitions and fresh product bets could rewrite growth for Darling Ingredients? The valuation narrative hinges on a radical transformation, and surprising numbers underscore just how much is projected to change. Only the full story reveals the financial leaps tied to these assumptions.

Result: Fair Value of $46.17 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent regulatory uncertainty and volatile feedstock costs could present challenges for Darling Ingredients in maintaining margin improvements and meeting ambitious earnings forecasts.

Find out about the key risks to this Darling Ingredients narrative.

Another View: The Multiples Perspective

Looking at Darling Ingredients from a different angle, its current price-to-earnings ratio stands at 50.7 times, which is much higher than both the peer average of 16 times and the US Food industry average of 18.3 times. Notably, the fair ratio the market could move towards is 46.6 times. This gap signals a valuation risk. Even as growth hopes run high, the stock is priced well above its industry and historic benchmarks. Could the market's enthusiasm be setting up for disappointment, or is this premium justified by long-term transformation?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Darling Ingredients Narrative

If your perspective differs or you enjoy digging into the data firsthand, you can craft your own analysis in just a few minutes. Do it your way

A great starting point for your Darling Ingredients research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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