Inghams Rallies 7.4% After Holding Guidance
Inghams (ASX:ING) jumped 7.4% on Monday to close at A$1.82. That might not sound huge, but for a stock that recently fell to an all-time low of around A$1.78 in March and is down about 55% over the past year, it was a big day. The rally came after the company held an investor day and gave the market a long-awaited reason to feel better. What makes the move even more interesting is that Inghams also warned about higher fuel costs the same day, but investors looked past it. So the big question: Is this the real turnaround or just a quick bounce from very low levels?
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Why Inghams Stood Out While Other Stocks Got Punished
The most important news was simple. Inghams said it still expects to make between A$180 million and A$200 million in profit (underlying EBITDA) for FY26. That target was already cut back in February, so just sticking to it was enough to calm the market.
To put this in context, CSL (ASX:CSL) crashed more than 18% on the same day after cutting its profit forecast for the fourth time in two years. In a season where most companies are delivering bad news, simply not delivering bad news made Inghams look like a winner.
The trading update also showed real signs of progress. Chicken volumes and prices were both up a little over the first nine months of the year. The company’s cost-cutting plan is on track to save A$60–80 million a year, and old frozen stock has been cleared out, which frees up cash. Our view is simple: with expectations already on the floor, even a steady update was always going to send the stock higher.
The Fuel Cost Warning Investors Brushed Off
Not everything in the update was good news. Inghams said higher diesel costs will hit profits by about A$7–10 million this year, though some of that will be offset by price rises and cost savings. The bigger worry is next year (FY27). Tensions in the Middle East are pushing up the cost of feed grains like wheat and soymeal, and that could mean a tougher year ahead.
The good news is that Inghams has already locked in feed prices for the rest of FY26, so it has a buffer for the next few months. We think investors are happy to deal with the FY27 risk later because the FY26 promise is something they can rely on right now. The bear case is not dead, just delayed.
The Investor’s Takeaway for Inghams
Even after this rally, Inghams looks cheap. It trades at a P/E of around 12 and pays a dividend yield close to 6.6%, both well below its long-term averages.
For people already holding the stock, we believe the worst is now in the price, and sitting tight until the full-year result on 21 August looks sensible. For new buyers, the easiest gains are gone, but the stock still looks like a good value if the company can deliver on its FY26 promise.
The risks are real, though. Feed costs could spike in FY27, and Inghams has a history of breaking its own promises. Woolworths volumes also remain a watch-point given it is still Inghams’ single largest customer, although management is making real progress diversifying into other channels like quick-service restaurants and foodservice. 21 August will be the big test.
