Darling Ingredients Inc. (DAR): A Bull Case Theory 

We came across a bullish thesis on Darling Ingredients Inc. on Valueinvestorsclub.com by TallGuy. In this article, we will summarize the bulls’ thesis on DAR. Darling Ingredients Inc.’s share was trading at $37.01 as of December 2nd. DAR’s trailing and forward P/E were 54.88 and 11.07  respectively according to Yahoo Finance.

Darling Ingredients appears well-positioned heading into 2026, supported by favorable biofuel policy trends that are expected to sustain strong demand and pricing for fats and used cooking oil (UCO). This backdrop should drive a return to profitability for Diamond Green Diesel (DGD), of which Darling owns 50%.

Core Darling, spanning Feed, Food, and Fuel, is projected to generate $1.0–$1.2 billion in adjusted EBITDA, with an additional $400–$600 million contribution from DGD, resulting in total EBITDA of $1.4–$1.8 billion. With an enterprise value of $8.8 billion and priorities focused on deleveraging and capital returns, Darling’s improving earnings trajectory and policy tailwinds set up a strong recovery.

As the Renewable Volume Obligation (RVO) and small refinery exemptions are finalized, policy clarity should drive revaluation of feedstock and RIN prices. A proposed 50% reduction in RINs for foreign feedstock and biodiesel has already lifted domestic feedstock prices, while tightening supply may firm LCFS credits in California. DGD, the best-positioned renewable diesel (RD) and sustainable aviation fuel (SAF) asset, benefits from superior Gulf Coast logistics and the flexibility to operate fully on domestic feedstock if needed.

The company also plans to spin off its Food segment into a new joint venture, Nextida, with PB Leiner. Nextida’s upcoming GLP-1-stimulating supplement line, Nextida GC, could double JV EBITDA from ~$340 million, implying a valuation exceeding 75% of Darling’s market cap at peer multiples. With regulatory clarity, the Nextida spin, and reinstated capital returns, Darling could see significant upside as policy uncertainty fades and operational momentum accelerates.

Previously we covered a bullish thesis on Darling Ingredients Inc. (DAR) by Elliot in March 2025, which highlighted the company’s integration across feed, food, and fuel markets and its scale advantage in rendering. The stock has appreciated by 2.54% since our coverage due to commodity headwinds. The thesis still stands as TallGuy shares a similar view but emphasizes policy-driven tailwinds and the upcoming Nextida spin-off.

Darling Ingredients Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 50 hedge fund portfolios held DAR at the end of the second quarter which was 47 in the previous quarter. While we acknowledge the risk and potential of DAR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DAR and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.