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Here's Why Archer Daniels (ADM) is Poised for Q3 Earnings Beat

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Archer Daniels Midland Company (ADM - Free Report) is slated to report third-quarter 2021 results on Oct 26, 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 third-quarter earnings is pegged at 91 cents per share, which suggests an increase of 2.3% from the year-ago quarter’s reported figure. The consensus mark has moved up by a penny in the past 30 days. For third-quarter revenues, the consensus mark is pegged at $17.6 billion, suggesting 16.1% growth from the prior-year quarter’s reported figure.

In the last reported quarter, the company delivered an earnings surprise of 31.7%. Its earnings outperformed the Zacks Consensus Estimate by 28.1%, 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 solid demand for most of its products and continued strength in its Nutrition segment. Solid performance in its Ag Services & Oilseeds, and Carbohydrate Solutions has also been aiding the company. Significant gains in the Human and Animal Nutrition units have been aiding the Nutrition business. The trends are expected to have continued in the third quarter.

Within the Human Nutrition unit, the North America and EMEA regions have been benefiting from the strength in the flavors business, stemming from higher volumes and better product mix, particularly in the beverage category. Sales growth in specialty proteins is likely to have aided the Specialty Ingredients unit, while robust sales and margins in probiotics are expected to have contributed to the Health & Wellness category. The Animal Nutrition unit is expected to have witnessed continued positive demand in amino acids, and strength in feed additives and ingredients. Improved trends in the EMEA region are also likely to have contributed to the strong performance in the third quarter.

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 the third-quarter performance.

However, Archer Daniels remains exposed to headwinds, including higher performance-related compensation, project-related costs, and the shifting of costs from business segments into the centralized centers of excellence in supply chain and operations.

On its last reported quarter’s earnings call, management warned about the tightening of the corn markets, which is likely to have weighed on ethanol margins. This is expected to have resulted in a year-over-year sales decline in the Carbohydrates Solutions segment in third-quarter 2021.

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 +1.84%.

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:

Albertsons Companies, Inc. (ACI - Free Report) has an Earnings ESP of +5.68% and it currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Coca-Cola Company (KO - Free Report) has an Earnings ESP of +0.75% and a Zacks Rank #2 at present.

The Estee Lauder Companies Inc. (EL - Free Report) currently has an Earnings ESP of +0.24% and a Zacks Rank #3.