Back to top

Analyst Blog

Monsanto Company (MON - Analyst Report) reported strong results for fiscal second quarter 2013 with earnings of $2.73 per share, beating the Zacks Consensus Estimate of $2.55 by 7.1%. Earnings of this company, a leading provider of agricultural products also grew 19.7% year over year, driven by solid top line growth.

Following the solid second quarter results, Monsanto raised its earnings guidance for fiscal 2013.

Revenue: Monsanto generated revenues of $5.5 billion in the fiscal second quarter, an increase of 15.2%, driven by an improvement in its global corn business. The revenues also surpassed the Zacks Consensus Estimate of $5.3 billion by 2.8%.

On a segmental basis, revenue from the Seeds and Genomics segment increased 10.8% in the quarter to $4.3 billion, driven by an increase in corn seeds and traits net demand in Brazil and improving trends in the U.S seeds business.

Revenue from the Agricultural Productivity segment increased 36.7% in the quarter to $1.1 billion, driven by recovery in market environment.

Margins/Costs: During the quarter, gross margin was recorded at approximately 56.1%, indicating an increase of 90 basis points, from 57.0% registered in the year-ago comparable quarter.

Operating expenses were recorded at $958 million, up from $896 million recorded in the year-ago period.

Selling, general and administrative expenses and Research & Development, as a percentage of net sales, were in line with the year-ago quarter at 11.0% and 7.0%, respectively.

Balance Sheet: Exiting the fiscal second quarter, the company’s cash and cash equivalents stood at approximately $4.4 billion versus $4.6 billion at the end of fiscal first quarter 2013. Long-term debt was recorded at $2.0 billion, down from $2.1 billion at the end of the previous quarter.

Outlook: Management increased its guidance for ongoing earnings per share in fiscal 2013 to be within a range of $4.40-$4.50 from the previously announced range of $4.30-$4.40 per share. Monsanto has maintained its free cash flow guidance to be within the range of $1.8-$2.0 billion.

The net cash provided by operating activities is expected to be in the range of $2.9-$3.3 billion while net cash required by investing activities is likely to be in the range of $1.1-$1.3 billion.

Monsanto currently carries a Zacks Rank #2 (Buy). Other stocks worth a look in the chemicals industry are CVR Partners LP (UAN - Snapshot Report) and Balchem Corp. ; both carrying a Zacks Rank #1 (Strong Buy), whereas, Eastman Chemical Co. (EMN - Analyst Report) carries a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.