AI Stock Memo: DAR - Darling Ingredients - RankAlpha

DAR

Rating neutralAI Memo

Darling Ingredients

As of 2026-05-03/Confidence medium

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Data freshness

AI Memo

As of 2026-05-03 • Model: RankAlpha Sentiment Codex

Decision Panel

Action, confidence, horizon, and decision blockers at a glance.

Action

neutral

Confidence

medium

Horizon

—

Key catalyst

Q1 earnings rebound reset near-term expectations • 2026-04-30

Expected move: +4%

Biggest risk

The bear read is that part of Q1 strength was helped by favorable inventory valuation and policy/margin improvement that can reverse, while third-party coverage pointed to a slight revenue miss and a cautious initial market reaction. Analyst target-change flow was not readily available by May 3, 2026, so the revision signal is still incomplete.

Invalidation

Break below $52 or thesis failure.

What would change my mind?

The post-earnings bull read is that Q1 validated a real earnings-power rebound: MarketBeat reported DAR beat consensus EPS by $0.27, while company sources showed much stronger EBITDA, better DGD economics, and explicit Q2 core EBITDA guidance. If Q2 DGD is indeed stronger than Q1, estimates likely have room to move higher.

Research note

Recommendation

neutral

Confidence

medium

As of

2026-05-03

Base target

$61

p=1%

Bull target

$72

p=0%

Bear target

$52

p=0%

Key bullets

Fast scan of bull, bear, and watch items

BullKey bullets

Q2 DGD volume and margin follow-through is the next proof point
Deleveraging and portfolio simplification remain the medium-term rerating path
The post-earnings bull read is that Q1 validated a real earnings-power rebound: MarketBeat reported DAR beat consensus EPS by $0.27, while company sources showed much stronger EBITDA, better DGD economics, and explicit Q2 core EBITDA guidance.

BearKey bullets

DGD profitability remains exposed to renewable-fuel policy, RIN/LCFS dynamics, hedge effects, and feedstock price volatility.
Leverage remains meaningful at roughly 3.17x with total debt around $4.1 billion, limiting room for disappointment if margins soften.
Management's Q2 and medium-term outlook still depends on sustained core margin execution and continued favorable renewable-fuels economics.

WatchKey bullets

Q1 earnings rebound reset near-term expectations

Summary

High-level snapshot

Recommendation

neutral

Model confidence

medium

Timeframe

Asset

Equity

Trigger

Base case: $61 (p=1%)

Bull/Bear spread: +23% / -11%

Vs latest close: Bull +23% · Base +4% · Bear -11%

Scenario probabilities

Bull Target: $72 (p=0%)Base Target: $61 (p=1%)Bear Target: $52 (p=0%)

Commentary

Primary company sources confirm a strong Q1 earnings rebound, but the tone should stay cautious: third-party post-print coverage described an about 2.9% premarket dip tied to a slight revenue miss and leverage concerns, while readily verifiable analyst target or rating revisions were still thin as of May 3, 2026. With deterministic priors still negative over 20-120 days, this remains more of a monitoring-style follow-up than a high-conviction rerating call.

As of 2026-05-03 • Updated bi-weekly / post-earningsSource: Internal modelMethodology

Analyst Summary

Thesis highlights from the latest analysis

Bull Case

Bear Case

Drivers

Scannable catalysts and supporting factors

Q2 DGD volume and margin follow-through is the next proof point
Deleveraging and portfolio simplification remain the medium-term rerating path

Scenarios

Bull Target (Scenario probability)

$72 / p=0% prob

Base Target (Scenario probability)

$61 / p=1% prob

Bear Target (Scenario probability)

$52 / p=0% prob

Price $59 as of 2026-05-27

Nearest Scenario: Base (∆ 4%)

Targets vs latest close: Bull +23% · Base +4% · Bear -11%

Sentiment & Exposure

News Sentiment (30d)

0.10

Social Sentiment (7d)

0.00

Events

Other notable items detected

EVENT2026-04-30
Q1 earnings rebound reset near-term expectations
Darling's April 30, 2026 earnings release showed net income of $134.3 million, total net sales of $1.55 billion, and combined adjusted EBITDA of $406.8 million, with management also guiding Q2 2026 core ingredients adjusted EBITDA to about $260-$275 million; this is the clearest confirmed post-print inflection in the current packet [#8-K-2026-04-30].
Prob 75.00% • Move 5.00% • Priced-in 65.00%

Short-term Catalysts

Next few weeks

Q2 DGD volume and margin follow-through is the next proof point
2026-06-30
In the official April 30, 2026 earnings call transcript, management said Q2 Diamond Green Diesel should be stronger than Q1 and referenced roughly 320 million gallons of Q2 production, which could extend the renewable-fuels recovery if realized; failure to hold Q1 economics would likely unwind part of the post-earnings thesis.
Prob 60% • Move 6% • Priced-in 55%

Long-term Catalysts

Months to a year

Deleveraging and portfolio simplification remain the medium-term rerating path
2026-12-31
The company monetized about $45 million of production tax credits in Q1, but still ended the quarter with $4.1 billion of debt and a preliminary covenant leverage ratio of 3.17x; sustained cash generation, debt reduction, and execution on the collagen JV/regulatory process are the main ingredients for a cleaner rerating, while the 10-K still highlights biofuel-policy, commodity, and feedstock-volume risks [#10-K-2026-03-03].
Prob 50% • Move 9% • Priced-in 45%

Risks

DGD profitability remains exposed to renewable-fuel policy, RIN/LCFS dynamics, hedge effects, and feedstock price volatility.
Leverage remains meaningful at roughly 3.17x with total debt around $4.1 billion, limiting room for disappointment if margins soften.
Management's Q2 and medium-term outlook still depends on sustained core margin execution and continued favorable renewable-fuels economics.
The initial post-print setup was not cleanly bullish because revenue was close to consensus and some coverage tied the muted reaction to leverage concerns.

Peers

Symbol	Summary
INGR	Ingredion is a more conventional ingredient processor; useful for margin and valuation context, but it lacks DAR's renewable diesel and rendering exposure, so peer read-through is partial.
POST	Post offers a packaged-food/ingredient comparison set near DAR's market cap, but it is also a loose comp because DAR's earnings are more sensitive to biofuel policy, feedstock spreads, and DGD volatility.

Sources

Internal and external references used in this analysis

Model source: RankAlpha Sentiment Codex
Analysis date: 2026-05-03