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Monsanto (MON) Tops Q2 Earnings, Updates FY17 EPS Outlook
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Monsanto Company reported better-than-expected second-quarter fiscal 2017 (ended Feb 28, 2017) results.
Over the last six months, shares of this Zacks Rank #2 (Buy) stock yielded a return of 10.87%, outperforming 7.54% growth recorded by the Zacks categorized Agriculture/Products industry.
Earnings
Adjusted earnings from ongoing business came in at $3.19 per share, up 31.8% year over year in second-quarter fiscal 2017. Moreover, the bottom line surpassed the Zacks Consensus Estimate of $2.76. The impressive upside came on the back of the absence of the Argentine peso devaluation, notable gross profit growth in corn and soybean businesses, and revenue accrued from the sale of the Latitude business.
Revenues
During the reported quarter, Monsanto generated revenues of $5,074 million, up roughly 12% year over year. In addition, the top line exceeded the Zacks Consensus Estimate of $4,815 million.
On a segmental basis, revenues from Seeds and Genomics were up 9.7% year over year to $4,186 million. Revenues from Agricultural Productivity plunged 24.2% year over year to $888 million.
Cost & Margins
Monsanto’s cost of sales increased 9.7% year over year to $2,122 million. Gross margin expanded 90 basis points (bps) to 58.2%.
Operating expenses flared up 16.4% year over year to $1,088 million. Interest expenses were down roughly 1% to $102 million.
Balance Sheet and Cash Flow
Monsanto exited the quarter with cash and cash equivalents of $2,281 million, higher than $1,676 million recorded at the end of fiscal 2016. Long-term debt was $7,560 million as against $7,453 recorded on Aug 31, 2016.
In first-half fiscal 2017, Monsanto generated cash of $1,537 million from operating activities compared with $1,389 million recorded in the year-ago period. Capital spending was up 11% year over year to $543 million. Dividend payments in the quarter totaled $4757 million.
Free cash flow at the end of first-half fiscal 2017 was nearly $1 billion, higher than $900 million recorded in the prior-year period.
Outlook
MON anticipates to report adjusted earnings at the high end of the $4.50–$4.90 per share range, for fiscal 2017, on an ongoing basis.
Monsanto is aimed at boosting its business on the back of improved core seeds and genomics business, sound management of the agricultural productivity segment’s trade, strategic restructuring and appropriate investments.
Monsanto believes that Bayer AG’s buyout deal would open up a number of opportunities for its business.
Bayer’s distinct crop protection portfolio, when combined with Monsanto’s popular Climate FieldView and Seeds & Traits platform, would likely give rise to a highly competitive seeds traits and agricultural chemicals behemoth in the industry.
The largest all-cash deal ($66 billion), which awaits regulatory approvals, is anticipated to close by the end of 2017.
Other Stocks to Consider
Other similarly-ranked stocks in the industry are listed below:
Arconic Inc. has a remarkable positive average earnings surprise of 79.97% for the past four quarters.
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Monsanto (MON) Tops Q2 Earnings, Updates FY17 EPS Outlook
Monsanto Company reported better-than-expected second-quarter fiscal 2017 (ended Feb 28, 2017) results.
Over the last six months, shares of this Zacks Rank #2 (Buy) stock yielded a return of 10.87%, outperforming 7.54% growth recorded by the Zacks categorized Agriculture/Products industry.
Earnings
Adjusted earnings from ongoing business came in at $3.19 per share, up 31.8% year over year in second-quarter fiscal 2017. Moreover, the bottom line surpassed the Zacks Consensus Estimate of $2.76. The impressive upside came on the back of the absence of the Argentine peso devaluation, notable gross profit growth in corn and soybean businesses, and revenue accrued from the sale of the Latitude business.
Revenues
During the reported quarter, Monsanto generated revenues of $5,074 million, up roughly 12% year over year. In addition, the top line exceeded the Zacks Consensus Estimate of $4,815 million.
On a segmental basis, revenues from Seeds and Genomics were up 9.7% year over year to $4,186 million. Revenues from Agricultural Productivity plunged 24.2% year over year to $888 million.
Cost & Margins
Monsanto’s cost of sales increased 9.7% year over year to $2,122 million. Gross margin expanded 90 basis points (bps) to 58.2%.
Operating expenses flared up 16.4% year over year to $1,088 million. Interest expenses were down roughly 1% to $102 million.
Balance Sheet and Cash Flow
Monsanto exited the quarter with cash and cash equivalents of $2,281 million, higher than $1,676 million recorded at the end of fiscal 2016. Long-term debt was $7,560 million as against $7,453 recorded on Aug 31, 2016.
In first-half fiscal 2017, Monsanto generated cash of $1,537 million from operating activities compared with $1,389 million recorded in the year-ago period. Capital spending was up 11% year over year to $543 million. Dividend payments in the quarter totaled $4757 million.
Free cash flow at the end of first-half fiscal 2017 was nearly $1 billion, higher than $900 million recorded in the prior-year period.
Outlook
MON anticipates to report adjusted earnings at the high end of the $4.50–$4.90 per share range, for fiscal 2017, on an ongoing basis.
Monsanto is aimed at boosting its business on the back of improved core seeds and genomics business, sound management of the agricultural productivity segment’s trade, strategic restructuring and appropriate investments.
Bayer AG (BAYRY - Free Report) Deal Prospects
Monsanto believes that Bayer AG’s buyout deal would open up a number of opportunities for its business.
Bayer’s distinct crop protection portfolio, when combined with Monsanto’s popular Climate FieldView and Seeds & Traits platform, would likely give rise to a highly competitive seeds traits and agricultural chemicals behemoth in the industry.
The largest all-cash deal ($66 billion), which awaits regulatory approvals, is anticipated to close by the end of 2017.
Other Stocks to Consider
Other similarly-ranked stocks in the industry are listed below:
Albemarle Corporation (ALB - Free Report) has a positive average earnings surprise of 14.28% for the last four quarters. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Arconic Inc. has a remarkable positive average earnings surprise of 79.97% for the past four quarters.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>