Can DAR's 12.8% Weekly Rally Continue as Core Earnings Strengthen?

DAR's Core Earnings Base Looks Stronger

Core ingredients adjusted EBITDA climbed to $352.5 million in the second quarter of 2026 from $206.9 million a year earlier. Contract management, commercial optimization, price-risk management and operating efficiencies are helping Darling extract more earnings from its existing asset base.

Management expects third-quarter core ingredients adjusted EBITDA of $325-$340 million. Excluding the second-quarter tariff recovery in Food, that outlook implies underlying earnings generally consistent with the elevated second-quarter level, supporting the case for a more durable core earnings base.

Darling's DGD Economics Add Another Earnings Lift

Darling's share of Diamond Green Diesel adjusted EBITDA surged to $389.2 million from $42.6 million a year earlier. EBITDA per gallon sold rose to $2.23 from 34 cents, helped by higher Renewable Identification Number values, diesel prices, production tax credits and about $50.5 million of tariff recovery at the DGD entity level.

Valero Energy Corporation VLO, Darling's partner in Diamond Green Diesel, also has direct exposure to the venture's renewable-diesel economics. Bunge Global SA BG is relevant on the feedstock side, with its renewable-fuels partnerships and oilseed processing network positioning it in the same policy-driven demand chain.

DAR's Estimate Revisions Support the Rally

The Zacks Consensus Estimate for 2026 earnings has risen 55.1% in the past four weeks and 53.6% over the past 12 weeks. That magnitude of upward revision gives the recent stock-price advance a clearer earnings foundation.

Darling reported second-quarter earnings of $2.41 per share, compared with 8 cents a year earlier, and topped the consensus mark of $1.45. Continued estimate support will depend on core-margin execution and renewable-fuel economics holding up through the balance of the year.

Darling Still Faces Capacity and Cost Pressure

Feed raw material processed remained at 3.1 million metric tons in the second quarter, unchanged from both a year earlier and the first quarter. Darling is out of rendering capacity in Brazil, while faster U.S. poultry line speeds could put additional pressure on its processing network.

Selling, general and administrative expenses rose to $151 million from $138.1 million a year earlier, while acquisition and integration costs increased to $13.2 million from $3.4 million. If commodity prices or DGD margins retreat, those costs could limit operating leverage and cash conversion.

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DAR's Ratings Mix Supports Cautious Optimism

DAR's 12.8% weekly rally has a solid earnings foundation, but continuation is not assured. Stronger core earnings, favorable DGD economics and sharply higher estimates are constructive, while throughput constraints and a higher expense base leave less room for weaker pricing or renewable-fuel margins.

DAR currently carries a Zacks Rank #1 (Strong Buy). It also has a VGM Score of A, Growth Score of A and Value Score of B, while its Momentum Score of D is the weaker signal. The favorable Rank and broader Style Score mix support the earnings case, but the Momentum Score argues for a measured view after the rapid weekly advance. You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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