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Archer Daniels (ADM) Still in Trouble: Would You Hold It?
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Are the troubles over for Archer Daniels Midland Co. (ADM - Free Report) ? This leading food processing company has been putting up disappointing performances for over a year. This is reflected in the substantial drop in its stock price. The shares of the company have lost nearly 16% in the past one year mainly due to dismal sales performance.
Archer Daniels’ start to fiscal 2016 was no different. The company posted another dismal quarter, with both the top and the bottom line missing estimates, marking its fourth straight quarter of negative earnings surprise and the tenth consecutive sales miss. With this, the company has delivered an average negative surprise of 7.9% over the trailing four quarters.
The top line was affected by adverse market conditions and ongoing currency headwinds, which resulted in lower sales at all of its operating segments. Consequently, earnings declined due to soft sales and weak margins.
This Zacks Rank #3 (Hold) company in spite of its travails is leaving no stone unturned to return to a growth trajectory. A key initiative in this direction is the company’s focus on strengthening its business through increased cost savings. The company targets run rate cost savings of $550 million over the next five years.
Alongside, the company is strategically undertaking steps to manage its business portfolio, which are expected to help in realizing value. The same will be invested in the best possible resources to enhance returns. This is evident from the company’s recent acquisitions and joint ventures as well as the sale of underperforming businesses. Moreover, the company is exploring new investment opportunities to attain business growth. For this, it has shifted focus from domestic projects – where returns are difficult to model – to international projects that can be tracked more easily and will be accretive at a faster pace.
That said, we would rather wait and see whether Archer Daniels’ growth initiatives can help it tide over the dismal performance trend in the quarters to come.
Stocks that Warrant a Look
Some better-rated stocks in the same industry include Fresh Del Monte Produce Inc. (FDP - Free Report) sporting a Zacks Rank #1 (Strong Buy), and Ingredion Incorporated (INGR - Free Report) and Calavo Growers Inc. (CVGW - Free Report) , both carrying a Zacks Rank #2 (Buy).
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Archer Daniels (ADM) Still in Trouble: Would You Hold It?
Are the troubles over for Archer Daniels Midland Co. (ADM - Free Report) ? This leading food processing company has been putting up disappointing performances for over a year. This is reflected in the substantial drop in its stock price. The shares of the company have lost nearly 16% in the past one year mainly due to dismal sales performance.
Archer Daniels’ start to fiscal 2016 was no different. The company posted another dismal quarter, with both the top and the bottom line missing estimates, marking its fourth straight quarter of negative earnings surprise and the tenth consecutive sales miss. With this, the company has delivered an average negative surprise of 7.9% over the trailing four quarters.
The top line was affected by adverse market conditions and ongoing currency headwinds, which resulted in lower sales at all of its operating segments. Consequently, earnings declined due to soft sales and weak margins.
ARCHER DANIELS Price and Consensus
ARCHER DANIELS Price and Consensus | ARCHER DANIELS Quote
What Can Save the Day for Archer Daniels?
This Zacks Rank #3 (Hold) company in spite of its travails is leaving no stone unturned to return to a growth trajectory. A key initiative in this direction is the company’s focus on strengthening its business through increased cost savings. The company targets run rate cost savings of $550 million over the next five years.
Alongside, the company is strategically undertaking steps to manage its business portfolio, which are expected to help in realizing value. The same will be invested in the best possible resources to enhance returns. This is evident from the company’s recent acquisitions and joint ventures as well as the sale of underperforming businesses. Moreover, the company is exploring new investment opportunities to attain business growth. For this, it has shifted focus from domestic projects – where returns are difficult to model – to international projects that can be tracked more easily and will be accretive at a faster pace.
That said, we would rather wait and see whether Archer Daniels’ growth initiatives can help it tide over the dismal performance trend in the quarters to come.
Stocks that Warrant a Look
Some better-rated stocks in the same industry include Fresh Del Monte Produce Inc. (FDP - Free Report) sporting a Zacks Rank #1 (Strong Buy), and Ingredion Incorporated (INGR - Free Report) and Calavo Growers Inc. (CVGW - Free Report) , both carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>