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Can Monsanto (MON) Keep the Earnings Streak Alive?


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Monsanto Company (MON - Analyst Report) is set to report fiscal fourth-quarter 2013 results on Oct 2 before the market opens. Last quarter, the company posted a 3.75% positive surprise. Let’s see how things are shaping up for this announcement.

Factors to Consider This Quarter

Monsanto has been delivering strong results over the past few quarters. The company’s increased production, as a result of research and development efforts are proving beneficial. The improved product line based on evolving bio-science technology continues to provide the company a competitive edge over its peers. Global corn business is also on the rise, led by increases in regions like Latin America and Eastern Europe.

Last quarter, management was optimistic of reaching earnings per share range of $4.50–$4.55 in fiscal 2013, reflecting roughly 20% year-over-year growth. Monsanto also maintained its free cash flow expectations within the range of $1.8 billion–$2.0 billion.

Earnings Whispers?

Our proven model does not conclusively show that Monsanto is likely to beat earnings this quarter. That is because a stock needs to have both a positive Zacks Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here, as you will see below.

Zacks ESP: The Zacks ESP is 0.0%.

Zacks Rank #3 (Hold): Monsanto carries a Zacks Rank #3 (Hold). However, the Zacks Rank #3 (Hold) when combined with a 0.0% ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement.

Other Stocks to Consider

Here are some other companies you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:

The Scotts Miracle-Gro Company (SMG - Snapshot Report), with Earnings ESP of +5.26% and a Zacks Rank #2 (Buy).

Huntsman Corporation (HUN - Snapshot Report), with Earnings ESP of +1.85% and a Zacks Rank #3 (Hold).

Praxair Inc. (PX - Analyst Report), with Earnings ESP of +0.66% and a Zacks Rank #3 (Hold).

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