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Factors Likely to Drive Archer Daniels' (ADM) Earnings in Q2
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Archer Daniels Midland Company (ADM - Free Report) is slated to report second-quarter 2023 results on Jul 25, before market open. The company is likely to report top and bottom-line declines when it reports the second-quarter 2023 results.
The Zacks Consensus Estimate for the company’s second-quarter earnings is pegged at $1.59 per share, which suggests a decline of 26.1% from the year-ago quarter’s reported figure. However, the consensus mark has moved up by a penny in the past seven days. For second-quarter 2023 revenues, the consensus mark is pegged at $24.9 billion, suggesting an 8.7% decline from the prior-year quarter’s reported figure.
In the last reported quarter, the company delivered an earnings surprise of 22.2%. Its earnings outperformed the Zacks Consensus Estimate by 23.4%, on average, in the trailing four quarters.
Archer Daniels Midland Company Price and EPS Surprise
Archer Daniels has been exposed to headwinds, including higher performance-related compensation, project-related costs and shifting costs from business segments into the centralized centers of excellence in the supply chain and operations. These are likely to have led to a continued rise in SG&A expenses in the to-be-reported quarter. As a percentage of sales, we expect SG&A expenses to increase 30 basis points to 3.3% in the second quarter.
The company has also been reeling under the global impacts of inflation. It expects corporate costs for 2023 to be $1.5 billion, driven primarily by inflation and higher interest expenses. This is likely to get reflected in the company’s second-quarter cost performance, impacting margins.
Our model predicts the cost of products sold, as a percentage of sales, to expand 100 bps year over year to 93.3% in the second quarter. Lower sales and higher cost of products sold rate are likely to result in a soft gross margin in the quarter. We estimate the gross margin to contract 100 bps to 6.7% in the to-be-reported quarter. On a dollar basis, gross profit is expected to decline 24.2% year over year in the second quarter.
The overall Nutrition segment’s results in second-quarter 2023 are expected to be impacted by continued declines in Animal Nutrition performance because of weaker margins in amino acids. The decline is, however, likely to have been partially offset by Human Nutrition delivering almost flat year-over-year results on strong Flavors and SI growth.
Nevertheless, Archer Daniels has been gaining from solid demand, improved productivity, product innovations and persistent growth. On its last reported quarter’s earnings call, management revealed its expectations of strong demand for vegetable oil and ethanol, driven largely by robust demand for biodiesel and renewable diesel.
ADM expects resilient food demand to drive higher volumes and margins in starches, sweeteners and wheat milling. It expects positive contributions from productivity and innovation initiatives across the company, driving value throughout 2023. Gains from these efforts are also likely to have contributed to the company’s second-quarter performance.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Archer Daniels this season. 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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Archer Daniels currently has an Earnings ESP of -0.23% and a Zacks Rank #3.
Stocks With Favorable Combination
Here are some companies you may want to consider, as our model shows that they have the right combination of elements to deliver an earnings beat.
Molson Coors (TAP - Free Report) has an Earnings ESP of +20.90% and sports a Zacks Rank #1 at present. The company is expected to report top and bottom-line growth when it reports second-quarter 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.2 billion, which suggests growth of 10% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Molson Coors’ quarterly earnings has moved up 2.7% in the past seven days to $1.51 per share. The consensus mark suggests growth of 28.9% from the year-ago quarter’s reported number. TAP has delivered an earnings surprise of 32.1%, on average, in the trailing four quarters.
Beyond Meat (BYND - Free Report) has an Earnings ESP of +14.60% and a Zacks Rank #2 at present. The company is expected to report bottom-line growth when it reports second-quarter 2023 results. The Zacks Consensus Estimate for BYND’s quarterly loss has narrowed by 2 cents in the past 30 days to 81 cents per share. The consensus mark suggests a narrower loss from the $1.53 reported in the year-ago quarter.
The Zacks Consensus Estimate Beyond Meat’s quarterly revenues is pegged at $111.3 million, which indicates a decline of 24.3% from the figure reported in the prior-year quarter. BYND reported a positive bottom-line surprise of 8.9% in the last reported quarter. Meanwhile, it has delivered a negative earnings surprise of 14.1%, on average, in the trailing four quarters.
Coca-Cola (KO - Free Report) has an Earnings ESP of +2.00% and a Zacks Rank #3 at present. The company is slated to witness top and bottom-line growth when it reports second-quarter 2023 results. The Zacks Consensus Estimate for KO’s quarterly revenues is pegged at $11.7 billion, which suggests growth of 3.6% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Coca-Cola’s quarterly earnings has moved up by a penny in the past seven days to 72 cents per share, suggesting growth of 2.9% from the year-ago quarter’s reported number. KO has delivered a positive earnings surprise of 4.2%, on average, in the trailing four quarters.
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Factors Likely to Drive Archer Daniels' (ADM) Earnings in Q2
Archer Daniels Midland Company (ADM - Free Report) is slated to report second-quarter 2023 results on Jul 25, before market open. The company is likely to report top and bottom-line declines when it reports the second-quarter 2023 results.
The Zacks Consensus Estimate for the company’s second-quarter earnings is pegged at $1.59 per share, which suggests a decline of 26.1% from the year-ago quarter’s reported figure. However, the consensus mark has moved up by a penny in the past seven days. For second-quarter 2023 revenues, the consensus mark is pegged at $24.9 billion, suggesting an 8.7% decline from the prior-year quarter’s reported figure.
In the last reported quarter, the company delivered an earnings surprise of 22.2%. Its earnings outperformed the Zacks Consensus Estimate by 23.4%, on average, in the trailing four quarters.
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 has been exposed to headwinds, including higher performance-related compensation, project-related costs and shifting costs from business segments into the centralized centers of excellence in the supply chain and operations. These are likely to have led to a continued rise in SG&A expenses in the to-be-reported quarter. As a percentage of sales, we expect SG&A expenses to increase 30 basis points to 3.3% in the second quarter.
The company has also been reeling under the global impacts of inflation. It expects corporate costs for 2023 to be $1.5 billion, driven primarily by inflation and higher interest expenses. This is likely to get reflected in the company’s second-quarter cost performance, impacting margins.
Our model predicts the cost of products sold, as a percentage of sales, to expand 100 bps year over year to 93.3% in the second quarter. Lower sales and higher cost of products sold rate are likely to result in a soft gross margin in the quarter. We estimate the gross margin to contract 100 bps to 6.7% in the to-be-reported quarter. On a dollar basis, gross profit is expected to decline 24.2% year over year in the second quarter.
The overall Nutrition segment’s results in second-quarter 2023 are expected to be impacted by continued declines in Animal Nutrition performance because of weaker margins in amino acids. The decline is, however, likely to have been partially offset by Human Nutrition delivering almost flat year-over-year results on strong Flavors and SI growth.
Nevertheless, Archer Daniels has been gaining from solid demand, improved productivity, product innovations and persistent growth. On its last reported quarter’s earnings call, management revealed its expectations of strong demand for vegetable oil and ethanol, driven largely by robust demand for biodiesel and renewable diesel.
ADM expects resilient food demand to drive higher volumes and margins in starches, sweeteners and wheat milling. It expects positive contributions from productivity and innovation initiatives across the company, driving value throughout 2023. Gains from these efforts are also likely to have contributed to the company’s second-quarter performance.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Archer Daniels this season. 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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Archer Daniels currently has an Earnings ESP of -0.23% and a Zacks Rank #3.
Stocks With Favorable Combination
Here are some companies you may want to consider, as our model shows that they have the right combination of elements to deliver an earnings beat.
Molson Coors (TAP - Free Report) has an Earnings ESP of +20.90% and sports a Zacks Rank #1 at present. The company is expected to report top and bottom-line growth when it reports second-quarter 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.2 billion, which suggests growth of 10% from the figure reported in the prior-year quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Molson Coors’ quarterly earnings has moved up 2.7% in the past seven days to $1.51 per share. The consensus mark suggests growth of 28.9% from the year-ago quarter’s reported number. TAP has delivered an earnings surprise of 32.1%, on average, in the trailing four quarters.
Beyond Meat (BYND - Free Report) has an Earnings ESP of +14.60% and a Zacks Rank #2 at present. The company is expected to report bottom-line growth when it reports second-quarter 2023 results. The Zacks Consensus Estimate for BYND’s quarterly loss has narrowed by 2 cents in the past 30 days to 81 cents per share. The consensus mark suggests a narrower loss from the $1.53 reported in the year-ago quarter.
The Zacks Consensus Estimate Beyond Meat’s quarterly revenues is pegged at $111.3 million, which indicates a decline of 24.3% from the figure reported in the prior-year quarter. BYND reported a positive bottom-line surprise of 8.9% in the last reported quarter. Meanwhile, it has delivered a negative earnings surprise of 14.1%, on average, in the trailing four quarters.
Coca-Cola (KO - Free Report) has an Earnings ESP of +2.00% and a Zacks Rank #3 at present. The company is slated to witness top and bottom-line growth when it reports second-quarter 2023 results. The Zacks Consensus Estimate for KO’s quarterly revenues is pegged at $11.7 billion, which suggests growth of 3.6% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Coca-Cola’s quarterly earnings has moved up by a penny in the past seven days to 72 cents per share, suggesting growth of 2.9% from the year-ago quarter’s reported number. KO has delivered a positive earnings surprise of 4.2%, on average, in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.