ATCHISON, Kan.—Karen Seaberg, a director and ten percent owner of MGP Ingredients Inc. (NASDAQ:MGPI), has recently sold a significant portion of her holdings in the company. According to a filing with the Securities and Exchange Commission, Seaberg sold 43,282 shares of MGP Ingredients common stock. The shares were sold at an average price of $46.05, totaling approximately $1.99 million.
Following this transaction, Seaberg continues to hold a substantial number of shares across various entities. Her remaining holdings include 1,950,876 shares through Cray MGP Holdings LP, 134,969 shares through a Trust, 85,985 shares in an IRA, 54,542 shares in a GST Trust for LM, 61,522 shares in a GST Trust for MH, and 385,661 shares through Seaberg MGP Holdings.
The sales were executed in multiple transactions at prices ranging from $45.84 to $46.31 per share. MGP Ingredients, headquartered in Atchison, Kansas, is a leading producer of distilled spirits and specialty wheat proteins and starches.
In other recent news, MGP Ingredients faced significant challenges as revealed in its Third Quarter 2024 earnings call. The company reported a 24% decrease in consolidated sales to $161.5 million, primarily due to a 36% drop in Distilling Solutions sales, reflecting a downturn in the American whiskey market. Despite these hurdles, MGP Ingredients saw an 82% increase in net income to $23.9 million, supported by a steady cash flow from operations of $73.5 million.
TD Cowen recently downgraded MGP Ingredients' stock from Buy to Hold, lowering the price target to $50 from $66. The firm cited persistent supply and demand imbalances for "Brown Goods" and margin challenges in Distilling Solutions as the main reasons for the downgrade.
In response to these developments, MGP Ingredients has initiated strategic measures for long-term growth. These include reducing whiskey production, exploring international expansion, and focusing on new distillate contracts. The acquisition of Luxco is also a notable strategic move towards becoming a premier branded spirits company.
Looking forward, MGP Ingredients anticipates a nearly 35% decline in Distilling Solutions segment sales and a 50% drop in gross profits for 2025. However, the company expects the Ingredient Solutions segment to stabilize and grow, while the Branded Spirits segment aims for top-line growth and margin expansion. These recent developments reflect MGP Ingredients' resilient approach to navigating current market obstacles.
InvestingPro Insights
The recent sale of shares by Karen Seaberg comes at a time when MGP Ingredients (NASDAQ:MGPI) is facing some market challenges. According to InvestingPro data, the company's stock has experienced a significant decline, with a 47.14% drop in the three-month price total return and a 41.56% decrease over the past six months. This downward trend is further emphasized by the stock trading near its 52-week low, with the current price at only 45.89% of its 52-week high.
Despite these headwinds, MGPI maintains a relatively strong financial position. The company's P/E ratio of 9.74 suggests it may be undervalued compared to industry peers. Additionally, an InvestingPro Tip indicates that MGPI is trading at a low earnings multiple, which could potentially attract value investors.
It's worth noting that while revenue has declined by 9.22% over the last twelve months, MGPI has managed to maintain profitability. The company's gross profit margin stands at a healthy 40.26%, and its operating income margin is 23.06%, indicating efficient cost management despite revenue challenges.
For investors seeking more comprehensive analysis, InvestingPro offers 12 additional tips for MGPI, providing a deeper understanding of the company's financial health and market position. These insights could be particularly valuable given the recent insider selling activity and the stock's current market performance.
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