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Archer Daniels (ADM) Beats on Q1 Earnings & Sales, Up Y/Y
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Archer Daniels Midland Company (ADM - Free Report) began 2018 on a solid note with first-quarter results outpacing the estimates and increasing year over year. With this, the company breaks its more than three-year long trend of sales misses, besides second straight earnings beat.
Following the earnings announcement, shares of the company did not swing in the pre-market trading session. In the past six months, this Zacks Rank #2 (Buy) stock has rallied 13%, outperforming the industry’s gain of 7.5%.
Q1 Highlights
The company’s first-quarter adjusted earnings of 68 cents per share increased 13.3% year over year and substantially outpaced the Zacks Consensus Estimate of 47 cents.
On a reported basis, Archer Daniels’ earnings were 70 cents per share compared with 59 cents in the prior-year quarter.
Moreover, the company’s revenues of $15,526 million grew 3.6% year over year and surpassed the Zacks Consensus Estimate of $14,523 million. The upside was driven by solid sales across all segments except the Origination segment.
Recently, management realigned its business segments into Carbohydrate Solutions, Nutrition, Oilseeds and Origination, to accelerate growth and resonate well with changing customers’ needs. Earlier, the company used to report operational results under the Agricultural Services, Corn Processing, Oilseeds Processing and, Wild Flavors and Specialty Ingredients segments.
According to the reclassification, the Carbohydrate Solutions segment will comprise the Corn and Milling operations; Nutrition unit will include Animal Nutrition and Bioactives businesses as well as the Wild Flavors & Specialty Ingredients segment (WFSI); the Oilseeds segment will remain unchanged; and Origination will include the Agricultural Services business, excluding Milling.
Archer Daniels Midland Company Price and Consensus
Going by segments, quarterly revenues at Oilseeds, Carbohydrate Solutions and Nutrition were up 7.8%, 4.5% and 11.1%, respectively, to $5,633 million, $2,622 million and $950 million. Also, revenues grew 12.8% to $106 million at the Other segment in the first quarter. However, revenues declined 1.4% to $6,215 million at the Origination segment.
Operational Discussion
Archer Daniels reported adjusted segment operating profit of $717 million in first-quarter 2018, up 5.7% from the year-ago quarter. On a GAAP basis, the company’s segment operating profit rose 4.1% year over year to $704 million.
On a segmental adjusted basis, adjusted operating profit for the Oilseeds segment climbed 11.8% year over year to $350 million. The uptick can be attributed to robust global market dynamics that lead to increased soybean crush margins. Notably, this segment witnessed crush volume records in North and South America. Further, sturdy origination volumes and higher margins were witnessed in South America. Additionally, robust results at Refining, Packaging, Biodiesel and Other operations aided segment’s growth. However, results were soft year over year at Crushing and Origination along with lower contributions from Wilmar.
Carbohydrate Solutions segment’s adjusted operating profit inched up 0.9% to $213 million. Results benefited from enhanced results from joint ventures in North America as well as robust Starches and Sweeteners results. Moreover, Wheat Milling results rose year over year on higher margins. However, Bioproducts results were hurt by soft ethanol margins.
Nutrition segment’s adjusted operating profit rose 24.7% to $96 million. The upside stemmed from double-digit profit growth at Wild Flavors and results at Animal Nutrition grew substantially on solid trade sales and favorable product mix. However, the improvement was somewhat compensated with soft results at Specialty Ingredients.
However, adjusted operating profit for the Origination segment’s declined 4.3% to $45 million. During the quarter, gains from solid Merchandising and Handling results as well as sturdy Global Trade owing to higher volumes and margins were more than offset by weak U.S. export volumes and nearly $40 million of mark-to-market impact on existing contracts. Additionally, transportation results declined year over year, leading to higher operating expenses.
Financials
Archer Daniels ended the quarter with cash and cash equivalents of $797 million, long-term debt including current maturities of $6,670 million and shareholders’ equity of $18,737 million.
In the first quarter of 2018, Archer Daniels generated negative cash of $3,574 million from operating activities. Further, the company’s trailing four-quarter average adjusted ROIC came in at 6.4%.
Additionally, the company paid dividends of $190 million to shareholders in the quarter.
Looking Ahead
Management remains impressed with its quarterly results, which gained from the company’s strategic initiatives and cost-saving efforts. Moving ahead, Archer Daniels remains focused on five major platforms, animal nutrition, bioactives, carbohydrates, human nutrition and taste along with geographic regions to drive growth.
Archer Daniels remains optimistic to deliver solid results in 2018 on the back of improving market conditions, gains from U.S. tax reform, product innovations and Project Readiness.
Want More of Consumer Staples Stocks? Check These
United Natural Foods, Inc. (UNFI - Free Report) , with a long-term earnings growth rate of 8.2%, has pulled off an average positive earnings surprise of 10.7% in the trailing four quarters. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Calavo Growers, Inc. (CVGW - Free Report) carries a Zacks Rank #2 and has delivered an average positive earnings surprise of 31.6% in the last four quarters.
Limoneira Company (LMNR - Free Report) , also a Zacks Rank #2 stock has pulled off an average positive earnings surprise of 14.1% in the trailing four quarters.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Archer Daniels (ADM) Beats on Q1 Earnings & Sales, Up Y/Y
Archer Daniels Midland Company (ADM - Free Report) began 2018 on a solid note with first-quarter results outpacing the estimates and increasing year over year. With this, the company breaks its more than three-year long trend of sales misses, besides second straight earnings beat.
Following the earnings announcement, shares of the company did not swing in the pre-market trading session. In the past six months, this Zacks Rank #2 (Buy) stock has rallied 13%, outperforming the industry’s gain of 7.5%.
Q1 Highlights
The company’s first-quarter adjusted earnings of 68 cents per share increased 13.3% year over year and substantially outpaced the Zacks Consensus Estimate of 47 cents.
On a reported basis, Archer Daniels’ earnings were 70 cents per share compared with 59 cents in the prior-year quarter.
Moreover, the company’s revenues of $15,526 million grew 3.6% year over year and surpassed the Zacks Consensus Estimate of $14,523 million. The upside was driven by solid sales across all segments except the Origination segment.
Recently, management realigned its business segments into Carbohydrate Solutions, Nutrition, Oilseeds and Origination, to accelerate growth and resonate well with changing customers’ needs. Earlier, the company used to report operational results under the Agricultural Services, Corn Processing, Oilseeds Processing and, Wild Flavors and Specialty Ingredients segments.
According to the reclassification, the Carbohydrate Solutions segment will comprise the Corn and Milling operations; Nutrition unit will include Animal Nutrition and Bioactives businesses as well as the Wild Flavors & Specialty Ingredients segment (WFSI); the Oilseeds segment will remain unchanged; and Origination will include the Agricultural Services business, excluding Milling.
Archer Daniels Midland Company Price and Consensus
Archer Daniels Midland Company Price and Consensus | Archer Daniels Midland Company Quote
Going by segments, quarterly revenues at Oilseeds, Carbohydrate Solutions and Nutrition were up 7.8%, 4.5% and 11.1%, respectively, to $5,633 million, $2,622 million and $950 million. Also, revenues grew 12.8% to $106 million at the Other segment in the first quarter. However, revenues declined 1.4% to $6,215 million at the Origination segment.
Operational Discussion
Archer Daniels reported adjusted segment operating profit of $717 million in first-quarter 2018, up 5.7% from the year-ago quarter. On a GAAP basis, the company’s segment operating profit rose 4.1% year over year to $704 million.
On a segmental adjusted basis, adjusted operating profit for the Oilseeds segment climbed 11.8% year over year to $350 million. The uptick can be attributed to robust global market dynamics that lead to increased soybean crush margins. Notably, this segment witnessed crush volume records in North and South America. Further, sturdy origination volumes and higher margins were witnessed in South America. Additionally, robust results at Refining, Packaging, Biodiesel and Other operations aided segment’s growth. However, results were soft year over year at Crushing and Origination along with lower contributions from Wilmar.
Carbohydrate Solutions segment’s adjusted operating profit inched up 0.9% to $213 million. Results benefited from enhanced results from joint ventures in North America as well as robust Starches and Sweeteners results. Moreover, Wheat Milling results rose year over year on higher margins. However, Bioproducts results were hurt by soft ethanol margins.
Nutrition segment’s adjusted operating profit rose 24.7% to $96 million. The upside stemmed from double-digit profit growth at Wild Flavors and results at Animal Nutrition grew substantially on solid trade sales and favorable product mix. However, the improvement was somewhat compensated with soft results at Specialty Ingredients.
However, adjusted operating profit for the Origination segment’s declined 4.3% to $45 million. During the quarter, gains from solid Merchandising and Handling results as well as sturdy Global Trade owing to higher volumes and margins were more than offset by weak U.S. export volumes and nearly $40 million of mark-to-market impact on existing contracts. Additionally, transportation results declined year over year, leading to higher operating expenses.
Financials
Archer Daniels ended the quarter with cash and cash equivalents of $797 million, long-term debt including current maturities of $6,670 million and shareholders’ equity of $18,737 million.
In the first quarter of 2018, Archer Daniels generated negative cash of $3,574 million from operating activities. Further, the company’s trailing four-quarter average adjusted ROIC came in at 6.4%.
Additionally, the company paid dividends of $190 million to shareholders in the quarter.
Looking Ahead
Management remains impressed with its quarterly results, which gained from the company’s strategic initiatives and cost-saving efforts. Moving ahead, Archer Daniels remains focused on five major platforms, animal nutrition, bioactives, carbohydrates, human nutrition and taste along with geographic regions to drive growth.
Archer Daniels remains optimistic to deliver solid results in 2018 on the back of improving market conditions, gains from U.S. tax reform, product innovations and Project Readiness.
Want More of Consumer Staples Stocks? Check These
United Natural Foods, Inc. (UNFI - Free Report) , with a long-term earnings growth rate of 8.2%, has pulled off an average positive earnings surprise of 10.7% in the trailing four quarters. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Calavo Growers, Inc. (CVGW - Free Report) carries a Zacks Rank #2 and has delivered an average positive earnings surprise of 31.6% in the last four quarters.
Limoneira Company (LMNR - Free Report) , also a Zacks Rank #2 stock has pulled off an average positive earnings surprise of 14.1% in the trailing four quarters.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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