The Prudent Investor


How Corn Products International Makes Their Money
April 26, 2007, 7:01 am
Filed under: Consumer Goods

With a $2.3 billion market cap, Corn Products International Inc., the penultimate company in consideration, will now be examined.

Corn Products International is one of the world’s largest corn refiners, as well as a major supplier of food ingredients and industrial products derived from the wet milling of corn and other starch-based materials. The company is the largest producer of dextrose, and a leading regional producer of starch, high fructose corn syrup, and glucose.

Products are divided into sweeteners (53% of net sales), starch products (23%), and co-products (24%). Sweeteners include high fructose corn syrup (HFCS), used in soft drinks and other beverages and foods; and dextrose, used in the food industry. Starch products include mainly corn starch used as a component in the production of paper, corrugated containers, construction materials and textiles. Co-products include corn oil used as cooking oil and in the production of margarine and other foods, corn gluten feed sold as animal feed, and corn gluten meal sold as a feed protein, primarily to the poultry industry.

Standard & Poor expects to see sales grow this year in the 11% range, which is very significant. This would match the previous year’s sales growth. They also expect to see an earnings increase of 20% this year. Numbers of this sort are only seen by small companies, with the attendant risk of the small company. That said, Corn Products International will remain in consideration for addition to the portfolio.

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2 Comments so far
Leave a comment

P/E is too high for investment. (21)

Comment by Baobaobebe

Actually, the PE for the industry is 18.2, so that doesn’t bother me (their forward PE is 17.5, although I have a feeling that that will change). My only concern about the company is the current run up in price.

Comment by Admin




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