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Archer Daniels (ADM) Gains on Strategic Moves & Nutrition Unit

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Archer Daniels Midland Company (ADM - Free Report) intensifies its focus on boosting business growth through robust strategies. The company is steadily progressing on its three growth pillars, which are optimization to the core, operational efficiencies and strategic expansion. Moreover, its Project Readiness initiative bodes well. Buoyed by these endeavors, the company’s Nutrition segment has been performing outstandingly over time for a while now.

Impressively, shares of this agricultural procurer, processor and merchandiser have increased 22% year to date compared with the industry’s 18.5% growth. A VGM Score of B for this currently Zacks Rank #2 (Buy) company coupled with an expected earnings growth rate of 6.2% further adds strength.

Additionally, analysts look quite optimistic about the company, evident from its higher earnings estimate revisions. The Zacks Consensus Estimate for 2021 earnings of $4.53 and the same of $4.36 for 2022 reflect growth of 2.3% and 1.2%, respectively, in the past 30 days. Also, the consensus estimate for second-quarter 2021 earnings of 96 cents has improved a penny in the same time frame.

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Importantly, Archer Daniels’ three strategic pillars are consistently contributing to its performance. Under the optimize pillar, the company is on track with improvement in its key businesses, namely the Decatur complex, Golden Peanut and Three Nuts.

Moreover, as part of the company’s optimizing pillar, it continues to align with consumers’ changing nutritional preferences. Under its drive pillar, the company continues to adapt to its organizational structure to meet its operational excellence. Further, under the growth initiative, the company is looking to expand its footprint in the fast-growing alternative protein.

During its first-quarter earnings call on Apr 27, management highlighted that it has been witnessing a robust demand for beverages, alternative proteins and nutritional supplements for sometime now. Also, it anticipates a progressive recovery in global food service that will boost demand for sweeteners, flower and other ingredients in 2021.

Well, Archer Daniels’ strategic pillars for growth are guided and supported by the Readiness program, which solely concentrates on accelerating and enhancing its competitiveness. The company is on track with its Readiness goals of driving business improvement, standardizing functions and enriching consumer experience. Additionally, it is on course with its transformation strategy, which focuses on productivity and innovation. The company is utilizing innovative technologies to develop new products and boost operating capabilities.

Now talking about Archer Daniels’ Nutrition Segment, management remains optimistic about the performance of this unit on continued demand for flavors and proteins. Moreover, it is enhancing its animal nutrition capabilities. On its last earnings call, management said that it expects improving demand for animal nutrition products on easing restrictions, which will aid second-quarter 2021 results. During the first quarter, revenues at this segment rose 35.5% year over year while its adjusted operating profit grew 8.5% on significant gains in the Human Nutrition unit.

Overall, Archer Daniels is optimistic about 2021 and envisions strong year-over-year earnings growth across all its segments.

More Better-Ranked Consumer Staples Stocks

Darling Ingredients (DAR - Free Report) delivered an earnings surprise of 29.8% in the last four quarters, on average. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hain Celestial (HAIN - Free Report) has a trailing four-quarter earnings surprise of 26.4% and a Zacks Rank #2 at present.

Nomad Foods (NOMD - Free Report) delivered an earnings surprise of 10.3% in the trailing four quarters, on average. It currently carries a Zacks Rank of 2.

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