Ingredion Earnings: Lower Net Sales and Prices More Than Offset by Healthy Volumes, Boosting Profits

Narrow-moat Ingredion reported second-quarter net sales that were 6% lower than the prior year’s quarter, excluding the South Korea divestiture, largely because of lower corn prices, which affect pass-through contracts. However, adjusted operating income was up 8% versus the prior year's quarter on lower raw materials costs and increased volumes, which drove operating leverage. After updating our model for the second-quarter results, we're raising our fair value estimate to $122 from $120, largely because of the time value of money since our last update. We maintain our narrow moat rating.