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ADM (ADM) Up 9.6% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Archer Daniels Midland (ADM - Free Report) . Shares have added about 9.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is ADM due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Archer Daniels Q4 Earnings Miss Estimates, Revenues Fall
Archer Daniels posted fourth-quarter 2023 results, wherein both the top and bottom lines declined year over year.
Adjusted earnings of $1.36 per share in the fourth quarter missed the Zacks Consensus Estimate of $1.42. Also, the figure declined 30% from $1.93 in the year-ago quarter. On a reported basis, Archer Daniels’ earnings were $1.06 per share, down 42% from the year-ago quarter’s $1.84.
Revenues fell 11.4% year over year to $22,978 million and missed the Zacks Consensus Estimate of $23,652 million.
Segment-wise, revenues for Ag Services & Oilseeds fell 10.7% year over year, whereas Carbohydrate Solutions’ revenues dropped 19.4% year over year. Also, Nutrition witnessed a year-over-year revenue decline of 6.7%.
Meanwhile, we projected revenues for Ag Services & Oilseeds and Carbohydrate Solution segments to decline by 12.1% and 1%, respectively. We estimated Nutrition revenues to drop 4.5%.
The gross profit decreased marginally year over year to $1,740 million but exceeded our estimate of $1,525.2 million. Meanwhile, the gross margin expanded 80 basis points to 7.6% in the quarter under review. The metric fared better than our estimate of 6.5%. SG&A expenses rose 2.5% to $919 million. We expected SG&A expenses to decrease 5.8% for the quarter under review.
Archer Daniels has reported an adjusted segmental operating profit of $1.4 billion in fourth-quarter 2023, down 16% from the year-ago quarter. On a GAAP basis, ADM’s segmental operating profit fell 23% year over year to $1.2 billion.
Segmental Operating Profit
Adjusted operating profit for Ag Services & Oilseeds fell 20% year over year to $954 million. The decline was driven by lower margins, as global grain and oilseed supplies recovered, hurting commodity price levels. Improved volumes, mainly due to record export volumes out of Brazil, and reduced costs somewhat offset the impacts of lower margins. Equity earnings from Wilmar were about 59% lower compared with the prior year.
The Carbohydrate Solutions segment’s adjusted operating profit increased 12% to $309 million. The Starches and Sweeteners sub-segment, rose $9 million, as increased pricing and lower input costs offset issues from lower volumes and co-product margins. In Vantage Corn Processing, results improved $23 million on solid export demand, and steady domestic blending aided margins and higher ethanol production.
In the Nutrition segment, the adjusted operating loss of $10 million plunged 110% from $105 million in the year-ago quarter. The Human Nutrition segment’s operating profit was negative $25 million, about $112 million lower than the year-ago period, due to lower volumes and higher manufacturing costs, stemming from operational headwinds. Animal Nutrition's operating profit of $15 million was 17% lower year over year on reduced amino acid margins and lower sub-segment volumes overall.
Other Financials
The company ended the quarter with cash and cash equivalents of $1.4 billion; long-term debt, including current maturities, of $8.3 billion; and shareholders’ equity of $24.1 billion. As of Dec 31, 2023, ADM provided $4.5 billion in cash for operating activities. It repurchased shares worth $2.7 billion and cash dividends of $977 million in 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -8.58% due to these changes.
VGM Scores
At this time, ADM has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, ADM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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ADM (ADM) Up 9.6% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Archer Daniels Midland (ADM - Free Report) . Shares have added about 9.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is ADM due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Archer Daniels Q4 Earnings Miss Estimates, Revenues Fall
Archer Daniels posted fourth-quarter 2023 results, wherein both the top and bottom lines declined year over year.
Adjusted earnings of $1.36 per share in the fourth quarter missed the Zacks Consensus Estimate of $1.42. Also, the figure declined 30% from $1.93 in the year-ago quarter. On a reported basis, Archer Daniels’ earnings were $1.06 per share, down 42% from the year-ago quarter’s $1.84.
Revenues fell 11.4% year over year to $22,978 million and missed the Zacks Consensus Estimate of $23,652 million.
Segment-wise, revenues for Ag Services & Oilseeds fell 10.7% year over year, whereas Carbohydrate Solutions’ revenues dropped 19.4% year over year. Also, Nutrition witnessed a year-over-year revenue decline of 6.7%.
Meanwhile, we projected revenues for Ag Services & Oilseeds and Carbohydrate Solution segments to decline by 12.1% and 1%, respectively. We estimated Nutrition revenues to drop 4.5%.
The gross profit decreased marginally year over year to $1,740 million but exceeded our estimate of $1,525.2 million. Meanwhile, the gross margin expanded 80 basis points to 7.6% in the quarter under review. The metric fared better than our estimate of 6.5%. SG&A expenses rose 2.5% to $919 million. We expected SG&A expenses to decrease 5.8% for the quarter under review.
Archer Daniels has reported an adjusted segmental operating profit of $1.4 billion in fourth-quarter 2023, down 16% from the year-ago quarter. On a GAAP basis, ADM’s segmental operating profit fell 23% year over year to $1.2 billion.
Segmental Operating Profit
Adjusted operating profit for Ag Services & Oilseeds fell 20% year over year to $954 million. The decline was driven by lower margins, as global grain and oilseed supplies recovered, hurting commodity price levels. Improved volumes, mainly due to record export volumes out of Brazil, and reduced costs somewhat offset the impacts of lower margins. Equity earnings from Wilmar were about 59% lower compared with the prior year.
The Carbohydrate Solutions segment’s adjusted operating profit increased 12% to $309 million. The Starches and Sweeteners sub-segment, rose $9 million, as increased pricing and lower input costs offset issues from lower volumes and co-product margins. In Vantage Corn Processing, results improved $23 million on solid export demand, and steady domestic blending aided margins and higher ethanol production.
In the Nutrition segment, the adjusted operating loss of $10 million plunged 110% from $105 million in the year-ago quarter. The Human Nutrition segment’s operating profit was negative $25 million, about $112 million lower than the year-ago period, due to lower volumes and higher manufacturing costs, stemming from operational headwinds. Animal Nutrition's operating profit of $15 million was 17% lower year over year on reduced amino acid margins and lower sub-segment volumes overall.
Other Financials
The company ended the quarter with cash and cash equivalents of $1.4 billion; long-term debt, including current maturities, of $8.3 billion; and shareholders’ equity of $24.1 billion. As of Dec 31, 2023, ADM provided $4.5 billion in cash for operating activities. It repurchased shares worth $2.7 billion and cash dividends of $977 million in 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -8.58% due to these changes.
VGM Scores
At this time, ADM has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, ADM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.