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Here's Why Archer Daniels (ADM) is Poised for Q2 Earnings Beat

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Archer Daniels Midland Company (ADM - Free Report) is slated to report second-quarter 2021 results on Jul 27, before market open. The leading agricultural product company is likely to have witnessed earnings and revenue growth in the to-be-reported quarter.

The Zacks Consensus Estimate for the company’s second-quarter earnings is pegged at 97 cents per share, which suggests an increase of 14.1% from the year-ago quarter’s reported figure. The consensus mark has moved up by a penny in the past seven days. For second-quarter revenues, the consensus mark is pegged at $18.3 billion, suggesting 12.6% growth from the prior-year quarter’s reported figure.

In the last reported quarter, the company delivered an earnings surprise of 39%. Its earnings outperformed the Zacks Consensus Estimate by 36.8%, on average, in the trailing four quarters.

Archer Daniels Midland Company Price and EPS Surprise


Archer Daniels Midland Company Price and EPS Surprise

Archer Daniels Midland Company price-eps-surprise | Archer Daniels Midland Company Quote

Key Factors to Note

Archer Daniels’ sales have been gaining from the continued momentum in the Nutrition, and the Ag Services and Oilseeds units. Solid demand for the majority of its products has also been driving results. The trends are expected to have continued in the second quarter. The Nutrition unit is likely to have benefited from significant gains in the Human Nutrition unit as well as higher sales across various categories, particularly beverages. Positive product mix in North America and strong margins in EMEAI regions have been other drivers. The Health and Wellness categories are expected to have gained from strong demand for probiotics and fibers.

On the last reported quarter’s earnings call, management pointed out that it is on track with innovations to boost the performance of the Nutrition segment. It is also looking to enhance plant-based protein capabilities as it remains optimistic about the performance of the unit on the continued demand for flavors and proteins. Management also stated that animal nutrition products are likely to witness a recovery in the second quarter as restrictions have begun to ease.

The company is expected to have gained from the progress on its growth initiatives as part of the Readiness program. The Readiness goals of driving business improvement, standardizing functions and enriching consumers’ experience are likely to have aided second-quarter results.

However, the company is likely to have witnessed continued headwinds in the Carbohydrate Solutions segment, owing to the ethanol industry weakness. Softness in the foodservice unit, which was impacted by the pandemic, is expected to have partly weighed on the second-quarter performance. The company’s second-quarter results are likely to reflect the impacts of SG&A cost deleverage, which has been hurting results for the past few quarters.

What the Zacks Model Unveils

Our proven model conclusively predicts an earnings beat for Archer Daniels this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Archer Daniels has a Zacks Rank #2 and an Earnings ESP of +1.64%.

Other Stocks Poised to Beat Earnings Estimates

Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season:

Darling Ingredients Inc. (DAR - Free Report) has an Earnings ESP of +8.86% and it presently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ulta Beauty Inc. (ULTA - Free Report) has an Earnings ESP of +20.36% and it currently flaunts a Zacks Rank #1.

Medifast, Inc. (MED - Free Report) has an Earnings ESP of +6.85% and a Zacks Rank #2 at present.