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Monsanto Q1 Beats on Earnings and Revs

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Monsanto Company (MON - Free Report) reported improved results for the first quarter of fiscal 2014 (ended Nov 30, 2013), with year-over-year improvement in revenues and earnings. The company recorded adjusted earnings per share from continuing operations of 67 cents, beating the Zacks Consensus Estimate of 63 cents by 6.3%. Reported earnings were also more than 62 cents earned a year ago.

On an as-reported basis, the company reported earnings per share of 69 cents, improving from the year-ago earnings per share of 63 cents.

Revenues: First-quarter revenues of $3,143.0 million beat the Zacks Consensus Estimate of $3,091.0 million by 1.7%. Also, revenues increased 6.9% year over year.

On a segment basis, revenues from Seeds and Genomics decreased 4.5% year over year to $1.7 billion. The decrease was a result of reduction of corn acres in Latin America, which was partially offset by a rise in the soybean and corn business. Revenues from Agricultural Productivity increased 23.9% year over year to $1.5 billion buoyed by favorable demand.

Cost & Margins: Monsanto’s gross profit margin was 50% compared with 48% recorded in the earlier-year quarter. Operating expenses were recorded at $998.0 million, which was higher than $888.0 million in the year-ago quarter.

In the reported quarter, selling, general and administrative, and research and development expenses, as a percentage of net sales, were recorded at 19.0% and 13.0%, respectively.

Balance Sheet/Cash Flow: Exiting fiscal first-quarter 2014, Monsanto’s cash and cash equivalents were approximately $4.5 billion compared with $3.7 billion at the end of fiscal fourth quarter 2013. Long-term debt was $3.1 billion against $2.1 billion in the prior quarter.

In the reported quarter, cash flow from operations was $1.7 billion compared with $1.6 billion in the year-ago quarter. Total capital spending was roughly $303.0 million against $133.0 million spent in the quarter ended Nov 2012.

Outlook: Based on the improved performance, management has reaffirmed its expectations for fiscal 2014. Earnings per share are expected in the range of $5.00 to $5.20. On an as-reported basis, the company expects to earn $5.02 to $5.22 per share.  

Management also reaffirmed free cash flow in the range of $600.0 million to $800.0 million. Cash flow from operating activities is projected in the range of $2.9 billion to $3.3 billion.  

Other Stocks to Consider

Monsanto currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Gruma S.A.B. de CV , The Scotts Miracle-Gro Company (SMG - Free Report) and The Andersons, Inc. (ANDE - Free Report) . While Gruma S.A.B. and The Scotts carry a Zacks Rank #1 (Strong Buy), The Andersons holds a Zacks Rank #2 (Buy).

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