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Monsanto Company (MON) Q2 Earnings Miss Estimates, Up Y/Y

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Monsanto Company reported weaker-than-expected results for second-quarter fiscal 2018 (ended February 2018).

Earnings

Quarterly adjusted earnings from ongoing business came in at $3.22 per share, missing the Zacks Consensus Estimate of $3.38. However, the bottom line came in higher than the year-ago tally of $3.19 per share.

Revenues

During the reported quarter, Monsanto generated revenues of $5,019 million, edging down 1.1% year over year. The top line also missed the Zacks Consensus Estimate of $5,489 million.

On a segmental basis, revenues from Seeds and Genomics dipped 2.3% year over year to $4,088 million. However, revenues from Agricultural Productivity were up 4.8% year over year to $931 million.

Monsanto Company Price, Consensus and EPS Surprise

 

Monsanto Company Price, Consensus and EPS Surprise | Monsanto Company Quote

Cost & Margins

Monsanto’s cost of sales dropped 3.3% year over year to $2,053 million during the fiscal second quarter. Gross profit margin expanded 90 basis points (bps) to 59.1% during the quarter.

Operating expenses during the quarter came in at $1,070 million, down 1.7% year over year. Interest expenses were $105 million, up 2.9% year over year.

Balance Sheet and Cash Flow

Exiting the fiscal second quarter, Monsanto had cash and cash equivalents of $2,409 million, higher than $1,856 million recorded at the end of fiscal 2017. Long-term debt was $6,635 million, as against $7,254 million recorded on Aug 31, 2017.

In the first half of fiscal 2018, Monsanto generated net cash of 1,630 million from operating activities compared with $1,537 million recorded in the year-ago period. Capital spending flared up 21.7% year over year to $661 million.

Outlook

Monsanto believes improved glyphosate pricing and elevated demand for innovative crop-yield enhancing solutions, such as Intacta RR2 PRO soybeans, will boost its near-term results.

This Zacks Rank #3 (Hold) company expects that Bayer AG’s (BAYRY - Free Report) buyout deal will open up a number of opportunities for its business.  

Bayer’s distinct crop-protection portfolio, when combined with Monsanto’s popular Climate FieldView and Seeds & Traits platform, is anticipated to give rise to a highly competitive seeds traits and agricultural chemicals behemoth in the industry.

The largest all-cash deal ($66 billion), which awaits regulatory approvals, is anticipated to close by the end of second quarter of calendar-year 2018.

Stocks to Consider

Two better-ranked stocks in the Zacks Basic Materials sector are listed below:

 

Cabot Corporation (CBT - Free Report) sports a Zacks Rank of 1 (Strong Buy). The company has pulled off an average positive earnings surprise of 3.68% in the last four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Schnitzer Steel Industries, Inc. , which carries a Zacks Rank of 2 (Buy), recorded an average positive earnings surprise of 0.81% during the same time frame.

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