• Darling Ingredients, ticker NYSE:DAR, has experienced a sustained decline in revenue and profitability, with earnings per share weakening over the past three years.
• The continued drop in earnings highlights operational and market pressures that are now a central focus for investors tracking the company.
• These trends raise questions around how management will respond and what this could mean for the company’s longer term direction.

Shares of Darling Ingredients last closed at $47.86, with the stock up 8.8% over the past week and 27.2% over the past month. Over the past year the share price is up 32.0%. However, the 3 year and 5 year returns show declines of 27.6% and 33.3%, indicating a tougher longer term picture for NYSE:DAR.

For investors, the combination of a stronger recent share price and weaker earnings trends places the company at an important crossroads. The earnings pressure could prompt management actions around costs, portfolio choices or capital allocation, and those decisions may reshape how the NYSE:DAR story looks in the coming years.

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The sustained decline in revenue and profitability, together with weaker earnings per share over the last three years, suggests investors are reassessing how much they are willing to pay for Darling Ingredients’ earnings power. For a company that collects and converts animal by-products and used cooking oil into ingredients for food, feed, fuel and industrial uses, pressure on margins signals that pricing, input costs or volumes are not lining up as cleanly as they once did, even as the share price has recently moved higher.

How this ties into the Darling Ingredients narrative

Existing narratives around Darling Ingredients already split between those who focus on potential upside from renewable diesel and specialty ingredients, and those who are more cautious about execution and regulatory risk. The current earnings squeeze sits right in the middle of that debate, because it tests the idea that newer ventures such as collagen, renewable fuels and health-focused products can offset tougher conditions in more traditional rendering and food ingredients lines.

Risks and rewards investors are weighing

• ⚠️ Sustained earnings-per-share pressure raises questions about how well the business can cover interest costs and fund growth without stretching the balance sheet.
• ⚠️ Competition for inputs and customers from peers such as Archer-Daniels-Midland and Bunge may keep pricing power in check if industry capacity stays high.
• 🎁 Diversification across feed, fuel and collagen-based products gives multiple earnings streams that could respond differently to changes in end markets.
• 🎁 The recent share price recovery suggests some investors see potential for operational improvements to close the gap between weaker recent earnings and their expectations.

What to watch next

From here, the key signals to watch are whether future updates show any stabilisation in revenue and margins, and how management talks about cost control, capital spending and the balance between traditional rendering and newer joint ventures. If you want to see how different investors are interpreting these developments and how they fit into the longer term story, check community narratives on Darling Ingredients here.

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.