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Archer Daniels Midland Q3 Preview: Can Shares Stay Hot?

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The Zacks Consumer Staples sector has held up relatively well in 2022, down 13%, vs. the S&P 500’s decline of more than 20%.

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Companies in the sector can generate revenue in the face of good and bad economic situations thanks to their products being in consistent demand.

A widely-recognized name in the sector, Archer Daniels Midland (ADM - Free Report) , is on deck to unveil quarterly earnings on October 25th, before the market open.

Archer Daniels Midland is one of the leading producers of food and beverage ingredients and goods made from various agricultural products.

Currently, the company carries a Zacks Rank #3 (Hold) paired with an overall VGM Score of an A.

How are things shaping up heading into the release? Let’s take a closer look.

Share Performance & Valuation

ADM Shares have been a bright spot in an otherwise dim market in 2022, up more than 30% and easily crushing the general market’s performance.

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Over the last three months, ADM shares have continued on their market-beating trajectory, up a double-digit 22% vs. the S&P 500’s 7% decline.

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The positive price action of Archer Daniels Midland shares indicates that bulls have been in control, with massive buying activity.

Shares don’t appear expensive; the company’s 12.8X forward earnings multiple sits well beneath the five-year median of 14.2X and represents a 32% discount relative to its Zacks Consumer Staples sector.

ADM sports a Style Score of an A for Value.

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Quarterly Estimates

Analysts have had a bullish stance on the company’s earnings outlook over the last several months, with four positive earnings estimate revisions hitting the tape. The Zacks Consensus EPS Estimate of $1.42 suggests Y/Y earnings growth of a sizable 46%.

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The company’s top-line appears to be in good standing also – the Zacks Consensus Sales Estimate of $22.9 billion indicates Y/Y revenue growth of more than 12%.

Quarterly Performance & Market Reactions

Archer Daniels Midland is on an impressive earnings streak, exceeding the Zacks Consensus EPS Estimate in 12 consecutive quarters, with 11 double-digit percentage beats.

Just in its latest print, the company registered a strong 23% bottom-line beat.

Revenue results have also been inspiring; ADM has chained together seven consecutive top-line beats over its last ten quarters. Below is a chart illustrating the company’s revenue on a quarterly basis.

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Image Source: Zacks Investment Research

Further, the market has cheered on its last three quarterly prints, with shares moving upward in each instance by at least 3%.

Putting Everything Together

ADM shares have provided investors with considerable returns in 2022, outperforming the general market across several timeframes.

Valuation multiples don’t appear stretched, with the company’s forward P/E ratio sitting beneath its five-year median and Zacks sector.

Analysts have been bullish on their earnings outlook, and estimates suggest sizable Y/Y upticks in revenue and earnings.

The company has been the definition of consistency, exceeding quarterly estimates repeatedly, and by sizable percentages.

Heading into the report, Archer Daniels Midland (ADM - Free Report) carries a Zacks Rank #3 (Hold) with an Earnings ESP Score of 4.1%.

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