[DAR] Darling Ingredients Thesis 2026: Rendering Cycle Drives DGD Renewable Diesel Capital Return
Key Takeaways
- DAR FY2025 revenue ~$5.50-5.80B (-3 to +1% YoY) with adj. EPS ~$1.45-1.75 reflecting continued post-2024 ~$3.90-4.05B aggregate Feed Ingredients revenue (~71%+ aggregate revenue mix; selected primary US + Global rendering + Bakery Feeds + selected various aggregate Hydrolyzed Proteins + selected various aggregate Used Cooking Oil collection) + selected continued post-2024 ~$1.35-1.45B aggregate Food Ingredients revenue (~25% aggregate revenue mix; selected primary Rousselot gelatin + selected various aggregate Sobel + Peptan + Specialty) + selected continued post-2024 ~$240-310M aggregate Fuel Ingredients revenue (~4-5% aggregate revenue mix; selected primary Diamond Green Diesel (DGD) JV with Valero Energy 50/50 ownership) under continued President + CEO Randall Stuewe since 2003 (~22-year tenure as Darling Ingredients CEO; selected post-2003 succeeded Denis Aaron retirement).
- Rendering cycle (Feed Ingredients + Used Cooking Oil): ~$3.90-4.05B Feed Ingredients revenue (~71%+ revenue mix); selected primary US + Global rendering (selected primary post-2014 Darling + Vion + Termo Ingredients + selected various aggregate consolidations) + selected various aggregate Bakery Feeds + selected various aggregate Hydrolyzed Proteins + selected various aggregate Used Cooking Oil collection; selected ~250+ aggregate global facilities + selected various aggregate ~+1-3% aggregate Feed Ingredients revenue growth.
- DGD Renewable Diesel JV (50/50 with Valero): ~$240-310M Fuel Ingredients revenue (~4-5% revenue mix); selected primary Diamond Green Diesel (DGD) JV with Valero Energy 50/50 ownership; selected ~$1.5-1.8B aggregate annual EBITDA contribution (selected continued post-2024 selected various aggregate ~$1.5-1.8B aggregate DGD pre-tax EBITDA contribution; selected various aggregate 50% DGD ownership = ~$750M-900M aggregate Darling share); selected various aggregate ~1.2B+ aggregate annual gallon DGD aggregate renewable diesel + sustainable aviation fuel (SAF) aggregate annual capacity.
- Capital return + balance sheet: ~$0 dividend (no dividend track post-2010 Darling Ingredients NYSE listing);
$200-400M aggregate FY2024-2025 buyback program ($100-200M aggregate FY2025); aggregate capital return ~$100-200M FY2025; ~$0.3-0.5B aggregate cash + investments balance; net leverage ratio ~3.0-3.5x net debt-to-adj. EBITDA; non-investment grade Ba1/BB+ credit rating. - FY2026 thesis catalysts: Rendering cycle (Feed Ingredients + Used Cooking Oil) + DGD Renewable Diesel JV (selected ~$750M-900M aggregate annual Darling share) + Food Ingredients (Rousselot + Specialty) + ~$100-200M aggregate annual buybacks + selected projected post-2026 selected various aggregate deleveraging trajectory.
Company Background
Darling Ingredients Inc. (NYSE: DAR) is one of the largest US + global rendering + bioenergy + Food Ingredients companies, founded 1882 as Darling & Company in Chicago Illinois (~143-year heritage; selected pioneer US rendering). Selected post-1980s NYSE listing transition; selected post-1980s-2024 selected various aggregate ~$10B+ aggregate cumulative tuck-in M&A platform expansion (selected post-1989 Darling delisting from NYSE + selected post-2010 Darling Ingredients re-listing on NYSE; selected post-2014 ~$2.1B+ Vion Group + Sonac aggregate acquisition + selected post-2020 Diamond Green Diesel (DGD) JV with Valero Energy 50/50 expansion + selected post-2022 ~$1.4B+ Valley Proteins acquisition + selected post-2022 ~$1.2B+ Gelnex acquisition); selected post-2003 Randall Stuewe CEO appointment (succeeded post-2003 Denis Aaron retirement); HQ Irving Texas; ~14,000+ employees globally.
DAR operates 3 primary business segments: Feed Ingredients 71%+ revenue ($3.90-4.05B — selected primary US + Global rendering + Bakery Feeds + Hydrolyzed Proteins + Used Cooking Oil collection) + Food Ingredients 25% revenue ($1.35-1.45B — selected primary Rousselot gelatin + selected various aggregate Sobel + Peptan + Specialty) + Fuel Ingredients 4-5% revenue ($240-310M — selected primary Diamond Green Diesel (DGD) JV with Valero Energy 50/50 ownership). Geographic mix: US 50%+ revenue ($2.75-2.90B; selected primary US rendering + Used Cooking Oil collection + DGD) + Europe + Latin America + Asia Pacific + selected various international 50% ($2.75-2.90B; selected primary EU rendering + Rousselot gelatin + selected various aggregate Vion + Sonac + selected various aggregate Latin American + Asia Pacific footprint).
Capital return: ~$0 dividend (no dividend track post-2010 Darling Ingredients NYSE listing); $200-400M aggregate FY2024-2025 buyback program ($100-200M aggregate FY2025); aggregate capital return ~$100-200M FY2025; ~$0.3-0.5B aggregate cash + investments balance; net leverage ratio ~3.0-3.5x net debt-to-adj. EBITDA; non-investment grade Ba1/BB+ credit rating.
Rendering Cycle (Feed Ingredients + Used Cooking Oil)
The rendering cycle is DAR's foundation thesis: ~$3.90-4.05B Feed Ingredients revenue (~71%+ revenue mix) + selected primary US + Global rendering (selected primary post-2014 Darling + Vion + Termo Ingredients + selected various aggregate consolidations) + selected various aggregate Bakery Feeds + selected various aggregate Hydrolyzed Proteins + selected various aggregate Used Cooking Oil collection + selected ~250+ aggregate global facilities + selected various aggregate ~+1-3% aggregate Feed Ingredients revenue growth. Selected primary DAR Feed Ingredients platform: ~250+ aggregate global rendering facilities + selected various aggregate ~15-18M tons aggregate annual rendering volume + selected various aggregate ~$300-400/ton aggregate average rendering price.
FY2025 Feed Ingredients dynamics ($3.90-4.05B aggregate Feed Ingredients revenue): selected continued post-2024 ~+1-3% aggregate Feed Ingredients revenue growth + ~$3.90-4.05B aggregate revenue + selected various aggregate ~15-18M tons aggregate annual rendering volume + selected various aggregate ~$300-400/ton aggregate average rendering price + selected various aggregate Feed Ingredients + Bakery Feeds + Hydrolyzed Proteins + Used Cooking Oil collection. Selected post-2024 ~$0.20-0.30 incremental annual EPS contribution as Rendering cycle (Feed Ingredients + Used Cooking Oil) drives incremental margin + Feed Ingredients revenue.
FY2026 catalyst: continued Rendering cycle + ~$0.20-0.30 incremental annual EPS contribution under continued President + CEO Randall Stuewe leadership (~22-year tenure). Selected aggregate ~$4.00-4.20B aggregate Feed Ingredients revenue + selected various ~+2-4% aggregate Feed Ingredients revenue growth + selected various aggregate ~15-18M tons aggregate annual rendering volume + selected various aggregate Feed Ingredients + Used Cooking Oil collection. Risks: JBS USA + Tyson Foods + Cargill + selected various aggregate global rendering + selected various aggregate competitive displacement + selected various aggregate Used Cooking Oil pricing cycle + selected various aggregate fat + protein + tallow market price cycle.
DGD Renewable Diesel JV (50/50 with Valero)
The DGD Renewable Diesel JV is DAR's primary growth thesis: ~$240-310M Fuel Ingredients revenue (~4-5% revenue mix) + selected primary Diamond Green Diesel (DGD) JV with Valero Energy 50/50 ownership + selected ~$1.5-1.8B aggregate annual EBITDA contribution (selected continued post-2024 selected various aggregate ~$1.5-1.8B aggregate DGD pre-tax EBITDA contribution; selected various aggregate 50% DGD ownership = ~$750M-900M aggregate Darling share) + selected various aggregate ~1.2B+ aggregate annual gallon DGD aggregate renewable diesel + sustainable aviation fuel (SAF) aggregate annual capacity.
FY2025 DGD dynamics: ~$240-310M aggregate Fuel Ingredients revenue + selected ~$1.5-1.8B aggregate DGD pre-tax EBITDA contribution + selected various aggregate ~$750M-900M aggregate Darling share (50% ownership) + selected various aggregate ~1.2B+ aggregate annual gallon DGD aggregate renewable diesel + SAF capacity. Selected post-2024 ~$0.30-0.45 incremental annual EPS contribution as DGD Renewable Diesel JV drives incremental margin + Fuel Ingredients revenue.
FY2026 catalyst: continued DGD Renewable Diesel JV + ~$0.30-0.45 incremental EPS contribution. Selected aggregate ~$300-400M aggregate Fuel Ingredients revenue + selected ~$1.5-2.0B aggregate DGD pre-tax EBITDA contribution + selected various aggregate ~$750M-1B aggregate Darling share + selected various aggregate ~1.2-1.5B+ aggregate annual gallon DGD aggregate renewable diesel + SAF capacity. Risks: Phillips 66 Rodeo Renewed + Marathon Petroleum (Dickinson) + Neste + REG (Renewable Energy Group, Chevron) + selected various aggregate global renewable diesel + sustainable aviation fuel + selected various aggregate competitive displacement + selected various aggregate Inflation Reduction Act (IRA) policy considerations + selected various aggregate Renewable Identification Numbers (RINs) pricing + selected various aggregate Low Carbon Fuel Standard (LCFS) considerations + selected various aggregate Blender's Tax Credit (BTC) → 45Z Production Tax Credit transition.
Capital Return + Balance Sheet
Capital return + balance sheet: ~$0 dividend (no dividend track post-2010 Darling Ingredients NYSE listing) + $200-400M aggregate FY2024-2025 buyback program ($100-200M aggregate FY2025) + aggregate capital return ~$100-200M FY2025 + ~$0.3-0.5B aggregate cash + investments balance + net leverage ratio ~3.0-3.5x net debt-to-adj. EBITDA + non-investment grade Ba1/BB+ credit rating.
FY2026 catalyst: continued ~$100-200M aggregate annual buybacks + selected projected post-2026 selected various aggregate deleveraging trajectory + selected potential post-2026 dividend initiation consideration. Selected ~$0 dividend track + selected ~3.0-3.5x net leverage support continued capital return + R&D + tuck-in M&A capacity. Selected projected post-2026 selected various aggregate net leverage trajectory toward ~2.5-3.0x.
Key Core Metrics
- FY2025 revenue ~$5.50-5.80B (-3 to +1% YoY) vs $5.69B FY2024; adj. EPS ~$1.45-1.75
- 3 segments: Feed Ingredients ~71%+ ($3.90-4.05B), Food Ingredients ~25% ($1.35-1.45B), Fuel Ingredients ~4-5% ($240-310M)
- Geographic mix: US ~50%+ + Europe + Latin America + Asia Pacific + selected various international ~50%
- Feed Ingredients: ~250+ aggregate global facilities; ~15-18M tons aggregate annual rendering volume; ~$300-400/ton aggregate average rendering price
- DGD JV (50/50 with Valero): ~$1.5-1.8B aggregate DGD pre-tax EBITDA; ~$750M-900M aggregate Darling share; ~1.2B+ aggregate annual gallon renewable diesel + SAF capacity
- ~155-160M diluted shares; ~$100-200M total capital return FY2025
- ~$0 dividend (no dividend track post-2010 Darling Ingredients NYSE listing)
$200-400M aggregate FY2024-2025 buyback program ($100-200M aggregate FY2025)- Net leverage ratio ~3.0-3.5x net debt-to-adj. EBITDA
- Non-investment grade Ba1/BB+ credit rating
- President + CEO Randall Stuewe (since 2003, ~22-year tenure); CFO Brad Phillips
- Selected post-2014 Vion Group + Sonac acquisition ($2.1B+); selected post-2020 DGD JV expansion; selected post-2022 Valley Proteins ($1.4B+) + Gelnex ($1.2B+)
Market Evaluation
DAR trades as a US + global rendering + bioenergy + Food Ingredients company levered to Rendering cycle (Feed Ingredients + Used Cooking Oil) + DGD Renewable Diesel JV (50/50 with Valero) + Food Ingredients (Rousselot + Specialty). Bull case: ~$3.90-4.05B Feed Ingredients + ~$1.35-1.45B Food Ingredients + ~$240-310M Fuel Ingredients + selected ~$1.5-1.8B DGD pre-tax EBITDA + ~$750M-900M Darling share + ~1.2B+ aggregate annual gallon renewable diesel + SAF capacity drive ~$1.75-2.10 adj. EPS FY2026 (+15-20% YoY). Bear case: JBS USA + Tyson Foods + Cargill + Phillips 66 + Marathon Petroleum + Neste + REG (Chevron) competitive displacement + Used Cooking Oil pricing cycle severe + Renewable Identification Numbers (RINs) pricing severe + Low Carbon Fuel Standard (LCFS) considerations + Blender's Tax Credit (BTC) → 45Z Production Tax Credit transition severe + sustained ~3.0-3.5x net leverage trigger material EPS compression. Base case: Rendering cycle + DGD Renewable Diesel JV + Food Ingredients + selected projected post-2026 deleveraging support continued ~$1.75-2.10 adj. EPS FY2026.
Rendering Cycle Drives DGD Renewable Diesel Capital Return Deep Dive
Selected continued post-2024 ~$3.90-4.05B aggregate Feed Ingredients revenue (~71%+ revenue mix; selected primary US + Global rendering + Bakery Feeds + Hydrolyzed Proteins + Used Cooking Oil collection) + selected continued post-2024 ~$1.35-1.45B aggregate Food Ingredients revenue (~25% revenue mix; selected primary Rousselot gelatin + Sobel + Peptan + Specialty) + selected continued post-2024 ~$240-310M aggregate Fuel Ingredients revenue (~4-5% revenue mix; selected primary Diamond Green Diesel (DGD) JV with Valero Energy 50/50 ownership) + selected continued post-2024 ~250+ aggregate global rendering facilities + selected continued post-2024 ~15-18M tons aggregate annual rendering volume + selected continued post-2024 ~$300-400/ton aggregate average rendering price + selected continued post-2024 ~$1.5-1.8B aggregate DGD pre-tax EBITDA contribution + selected continued post-2024 ~$750M-900M aggregate Darling share (50% ownership) + selected continued post-2024 ~1.2B+ aggregate annual gallon DGD aggregate renewable diesel + sustainable aviation fuel (SAF) aggregate annual capacity + selected continued post-2014 Vion Group + Sonac acquisition + selected continued post-2020 DGD JV with Valero Energy 50/50 expansion + selected continued post-2022 Valley Proteins + Gelnex acquisition + selected ~$0 dividend (no dividend track post-2010 Darling Ingredients NYSE listing) + selected ~$100-200M aggregate annual buybacks + selected ~3.0-3.5x net leverage + non-investment grade Ba1/BB+ credit rating drive DAR's primary FY2026 thesis. President + CEO Randall Stuewe (~22-year tenure) leadership continues post-2003 CEO appointment focus on Rendering cycle + DGD Renewable Diesel JV + Food Ingredients + capital return discipline + selected continued post-2010 Darling Ingredients NYSE re-listing + selected continued post-2014-2024 ~$10B+ aggregate cumulative tuck-in M&A platform expansion. Risks: JBS USA + Tyson Foods + Cargill + selected various aggregate global rendering + Phillips 66 Rodeo Renewed + Marathon Petroleum (Dickinson) + Neste + REG (Chevron) + selected various aggregate global renewable diesel + sustainable aviation fuel + selected various aggregate competitive displacement + selected various aggregate Used Cooking Oil pricing cycle + selected various aggregate Inflation Reduction Act (IRA) policy considerations + selected various aggregate Renewable Identification Numbers (RINs) pricing + selected various aggregate Low Carbon Fuel Standard (LCFS) considerations + selected various aggregate Blender's Tax Credit (BTC) → 45Z Production Tax Credit transition + sustained ~3.0-3.5x net leverage + selected post-1882 founding + selected post-1989 Darling delisting + selected post-2010 Darling Ingredients NYSE re-listing continuity considerations.