• If you are wondering whether Darling Ingredients is still fairly priced after a strong run, this article will walk through what the current market price might be implying about the stock's value.
• Shares recently closed at US$64.65, with returns of 9.6% over 7 days, 21.1% over 30 days, 71.8% year to date and 105.4% over the past year. That naturally raises questions about how much optimism or risk is now reflected in the price.
• Recent coverage has focused on Darling Ingredients as investors reassess companies in the food, beverage and tobacco space and how they fit into long term portfolios. That backdrop helps explain why the stock's strong 1 year return of 105.4% is drawing fresh attention to whether the current valuation still lines up with the fundamentals.
• On Simply Wall St's checks, Darling Ingredients currently holds a valuation score of 2 out of 6. This sets up a closer look at different valuation methods next and an alternative way of thinking about value that comes at the end of this article.

Darling Ingredients scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Darling Ingredients Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company might be worth by projecting its future cash flows and discounting them back to today using a required rate of return.

For Darling Ingredients, the model uses last twelve months Free Cash Flow of about $642.2 million and builds a two stage Free Cash Flow to Equity forecast. Analysts provide inputs that extend to 2027, including a projected Free Cash Flow of $817.4 million in that year. Beyond that point, Simply Wall St extrapolates the company’s cash flows out to 2035, with each year’s figure discounted back to a present value.

Aggregating these discounted cash flows yields an estimated intrinsic value of about $178.45 per share under this DCF approach. Compared with the recent share price of $64.65, the model output suggests the stock is trading at a 63.8% discount to this intrinsic estimate, indicating that investors are currently paying well below what the cash flow projections indicate.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Darling Ingredients is undervalued by 63.8%. Track this in your watchlist or portfolio, or discover 62 more high quality undervalued stocks.

Approach 2: Darling Ingredients Price vs Sales (P/S)

For companies where investors focus heavily on revenue and market reach, the P/S ratio is a useful way to think about value because it relates the share price directly to the sales the business generates. It is often used for businesses where earnings can be affected by accounting items, one off factors or investment cycles.

What counts as a “normal” P/S ratio typically reflects how the market views a company’s growth potential and risk profile. Higher expected growth or perceived resilience can support a higher P/S, while more uncertainty tends to pull it lower.

Darling Ingredients currently trades on a P/S ratio of 1.67x. This sits above both the Food industry average P/S of 0.75x and the peer average of 0.56x. Simply Wall St’s Fair Ratio for Darling Ingredients is 0.95x, which is a proprietary estimate of the P/S level that might fit the company when considering factors such as its earnings growth, profit margins, industry, market cap and risk profile.

Compared with simple peer or industry comparisons, the Fair Ratio gives a more tailored view because it pulls these company specific factors together rather than relying on broad averages. Since the current 1.67x P/S is above the 0.95x Fair Ratio, the shares currently appear overvalued on this measure.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Darling Ingredients Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St give you a clear story behind your numbers by letting you set your own view on Darling Ingredients’ future revenue, earnings and margins, link that story to a forecast and Fair Value, and then compare that Fair Value with the current price to decide whether the stock looks attractive or stretched. These Narratives update automatically when fresh news or earnings arrive. One investor might build a more optimistic Darling Ingredients Narrative that lines up with a higher Fair Value near US$70 based on expectations for stronger earnings, while another might prefer a more cautious Narrative closer to US$34 that leans on lower growth and margin assumptions. Both versions sit side by side on the Community page as easy-to-use tools that help you choose which story you believe and what that implies for your own decision making.

For Darling Ingredients, here are previews of two leading Darling Ingredients Narratives to make comparison easier for you:

Fair Value in this bullish Narrative: US$70.00

Implied discount to this Fair Value vs the recent US$64.65 share price: about 7.6% undervalued

Revenue growth assumption used in this Narrative: 4.40% a year

• Assumes Q4 execution, regulatory support, and the collagen and gelatin combination help support a higher Fair Value of US$70, with a future P/E of 13.84x applied to forecast earnings.
• Builds in higher profit margins of about 14.01% and revenue of US$6.8b by 2028, discounted back using a 6.98% rate to assess what that future profile could be worth today.
• Highlights upside drivers such as biofuels demand, premium collagen, and waste upcycling, while also flagging risks around regulation, alternative proteins, capital intensity, and competing waste technologies.

Fair Value in this more cautious Narrative: about US$64.08

Implied premium to this Fair Value vs the recent US$64.65 share price: about 0.9% overvalued

Revenue growth assumption used in this Narrative: 4.19% a year

• Anchors on the analyst consensus Fair Value of about US$64.08, with forecasts that earnings reach about US$1.5b by 2029 and the shares trade on a future P/E of 8.48x.
• Builds in a higher profit margin assumption of about 21.20% while using a 6.98% discount rate and modest share count growth of 0.28% a year.
• Emphasises execution and policy risks around renewable fuel credits, feedstock costs, leverage, and the pace of adoption in newer health and wellness products such as Nextida.

If you want to see both of these stories, plus other community views, side by side and updated as new data comes in, head to the full range of Narratives for Darling Ingredients on Simply Wall St. You can start with these two previews, then build or adjust your own view from there.

Do you think there's more to the story for Darling Ingredients? Head over to our Community to see what others are saying!

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.