MGP Ingredients Inc. (MGPI) fair value

ACCE thesis

MGP Ingredients makes bourbon, rye and other whiskeys under brands such as Penelope and Pure Kentucky, and also sells distilled spirits and specialty wheat proteins and starches to food and beverage makers. The business has a durable edge in aged inventory: distillers cannot easily ramp barrel-aged whiskey, so supply is tight when demand returns. Revenue fell 14.5% over the last year as spirits demand softened and destocking hit the ingredients side, and the stock trades at about 6.8x forward earnings with a 14.8% operating margin, so the question is whether the trough is near. The company carries a negative return on equity of -33.8% and a 35/100 score, which argues for caution, but the depressed multiple leaves room for a recovery if whiskey inventory normalises and volumes stabilise. It is worth a deeper look mainly to test whether earnings have bottomed; the -14.5% revenue trend is the number to watch.