Darling Ingredients' NYSE Texas Dual Listing: A Strategic Play for Undervalued Growth

The recent announcement of Darling Ingredients' (NYSE: DAR) dual listing on NYSE Texas marks a bold strategic move to capitalize on growing investor interest in Texas's thriving financial ecosystem. This decision, coupled with the company's undervalued stock price and resilient core operations, presents a compelling opportunity for investors to position themselves in a sector poised for recovery.

Strategic Market Access: Leveraging Texas's Economic Momentum

Texas is rapidly emerging as a financial hub, and NYSE Texas—its first fully electronic equities exchange—offers Darling Ingredients a platform to attract regional investors and deepen liquidity. The dual listing allows the company to maintain its primary NYSE listing while expanding its reach into a market with strong ties to energy, agriculture, and renewable industries. Texas's status as a global leader in biofuel production and its supportive regulatory environment aligns seamlessly with Darling's core business: processing agricultural by-products into sustainable ingredients for food, feed, and fuel.

The move also signals confidence in the company's long-term growth trajectory. As CEO Randall C. Stuewe emphasized, the listing underscores Darling's commitment to “innovation and sustainability,” two pillars of its circular business model. This model, which recycles 15% of global animal by-products into high-value products like collagen and biofuels, positions the company to benefit from rising demand for sustainable alternatives.

Undervalued Amid Temporary Headwinds
Darling's stock currently trades at $31.48, a 20% discount to its 52-week high of $39.17, despite its robust fundamentals.

The recent Q1 2025 results, which reported a net loss of $0.16 per share, have been misinterpreted by the market. While the loss stemmed from temporary regulatory shifts in renewable fuel credits and a 30% drop in Diamond Green Diesel (DGD) margins, the company's core operations remain strong:
- Food Ingredients Segment: EBITDA surged 15% to $70.9 million, driven by collagen demand and new product launches like Nextida GC.
- Feed Ingredients Segment: EBITDA rose 4% to $110.6 million, fueled by higher fat pricing and steady raw material volumes.
- Financial Discipline: The company reduced debt by $146 million, maintained a leverage ratio of 3.33x, and reaffirmed its 2025 EBITDA guidance of $1.25–$1.3 billion.

The Q1 loss is a temporary setback, not a structural issue. Management has already identified pathways to recovery: DGD's cost leadership, improving renewable fuel margins, and the pending resolution of regulatory uncertainties around the Renewable Volume Obligation (RVO) and California's LCFS.

Why Act Now? The Catalysts Ahead
1. Dual Listing Catalyst: NYSE Texas's growing prominence could attract institutional investors previously underweight in Darling's stock.
2. Margin Recovery: DGD's EBITDA per gallon is expected to rebound in Q2 2025 as the producer tax credit adjustment stabilizes.
3. Valuation Multiplier: At 5.2x trailing EBITDA (vs. a 5-year average of 6.8x), the stock is pricing in excessive pessimism about DGD's challenges.
4. Sustainability Tailwinds: Global demand for circular economy solutions is accelerating, with collagen and biofuel markets projected to grow at 6–8% annually.

Risks, But Manageable
- Regulatory Uncertainty: Ongoing debates over biofuel tax credits and LCFS compliance could delay margin recovery.
- Commodity Volatility: Feedstock prices tied to global agricultural markets remain unpredictable.

However, Darling's scale ($5.68 billion in annual revenue), liquidity ($1.27 billion in revolver availability), and diversified revenue streams mitigate these risks.

Conclusion: A Rare Buying Opportunity
Darling Ingredients' NYSE Texas listing is more than a symbolic move—it's a strategic bid to unlock value in a misunderstood stock. With a fortress balance sheet, resilient core segments, and a clear path to margin recovery, the stock is primed for a rebound. Investors who act now can secure a stake in a company that's both undervalued and positioned to capitalize on the $4.3 trillion circular economy market.

The Bottom Line: The dual listing is a catalyst to watch, but the real story is Darling's undervalued stock price. With a P/E ratio of just 8.5 (well below its 10-year average of 14.2) and a dividend yield of 1.3%, this is a rare chance to buy a global leader in sustainability at a bargain price. Act swiftly—the market won't overlook this opportunity for long.