Darling Ingredients just delivered a quarter that separates the business of collecting animal byproducts from the business of turning them into fuel. The core rendering operation continues to grind out steady cash, but the entire earnings inflection came from Diamond Green Diesel, the renewable diesel joint venture with Valero. Equity income from that venture swung from a loss to $350 million in the quarter. Consolidated net income rose from $12.7 million to $387.3 million. The market has noticed, pushing the stock toward the top of its fifty-two week range at $65.19.
The central debate is whether this is a policy-driven spike or a durable reset. The joint venture benefits from federal biofuel credits and California low-carbon fuel standards that remain politically exposed. Meanwhile, Darling is spending heavily on acquisitions and capital projects, with capital expenditures up 67% year over year. The investment case rests on whether management can convert a favorable regulatory window into permanent margin structure before the next policy shift.
The market is already paying for persistence. At $65.19, the shares trade near the top of their fifty-two week range and change hands at 17.5 times trailing earnings. The forward multiple of 11.4 times only makes sense if the biofuel contribution endures. The bear case writes itself: the same policy levers that created this windfall could remove it, and a company earning most of its operating income from a joint venture it does not control deserves a discount for that dependence. The bull case is that the core rendering business alone comes close to supporting the current valuation, which would mean the biofuel stream arrives nearly free of charge.