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Monsanto (MON) to Report Q1 Earnings: What's in the Cards?
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Monsanto Company is slated to report fiscal first-quarter 2018 (ended November 2017) results on Jan 4, before the market opens.
In the last year, Monsanto’s shares have yielded a return of 13%, outperforming 5.8% gain recorded by the industry.
In the last four quarters, the company pulled off an impressive average positive earnings surprise of 244.78%.
Let’s see how things are shaping up prior to this announcement.
Factors at Play
Solid demand for crop-yield enhancing products (like Roundup Ready 2 Xtend soybeans) and specialized glyphosate-based herbicides (like XtendiMax) are anticipated to bolster Monsanto’s sales. In addition, ongoing research and development investments will also likely aid the top line growth going forward. The Zacks Consensus Estimate for first-quarter revenues from the company’s Agricultural Productivity and Seeds and Genomics segments is currently pegged at $844 million and $1,926 million, respectively, higher than $802 million and $1,848 million recorded in the year-ago quarter.
Moreover, Monsanto believes that its margins in fiscal 2018 will likely be stronger on the back of improved Intacta penetration and pricing in South America, gains secured from Precision Planning business spin-off (closed on Sep 5, 2017) and improved glyphosate pricing. The Zacks Consensus Estimate for gross profit of the company’s Agriculture Productivity and Seeds and Genomics segments are currently pegged at $146 million and $1,201 million, higher than $119 million and $1,140 million recorded in the year-ago quarter.
However, in the last 60 days, the Zacks Consensus Estimate for earnings has remained unchanged for both fiscal 2018 and 2019, reflecting neutral sentiments.
We fear that stiff rivalry within the global seeds, traits and agricultural chemical industry might dent Monsanto’s growth.
Moreover, Monsanto is a highly levered company with approximately $7.3 billion of long-term debt at the end of fiscal fourth-quarter 2017. We believe, if unchecked, such high debt levels will increase the company's financial obligations and impact its profitability.
Monsanto’s cost and sales are highly sensitive to commodity price fluctuations. For instance, weak agricultural products’ prices might continue to weigh on Monsanto’s revenues and margins.
Monsanto accepted Bayer AG’s (BAYRY - Free Report) buyout offer worth $66 billion, inclusive of debt, in September 2016. Both companies look to close the deal by early 2018.
Earnings Whispers
Our proven model does not conclusively show that Monsanto will likely beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. That is not the case here as we will see below.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: Monsanto currently has an Earnings ESP of 0.00%. This is because both the Zacks Consensus Estimate and the Most Accurate estimate are pegged at 38 cents per share.
Zacks Rank: Monsanto carries a Zacks Rank #3. Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are two stocks within the industry that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Air Products and Chemicals, Inc. (APD - Free Report) with an Earnings ESP of +0.78% and a Zacks Rank #2.
Zacks Editor-in-Chief Goes ""All In"" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Image: Bigstock
Monsanto (MON) to Report Q1 Earnings: What's in the Cards?
Monsanto Company is slated to report fiscal first-quarter 2018 (ended November 2017) results on Jan 4, before the market opens.
In the last year, Monsanto’s shares have yielded a return of 13%, outperforming 5.8% gain recorded by the industry.
In the last four quarters, the company pulled off an impressive average positive earnings surprise of 244.78%.
Let’s see how things are shaping up prior to this announcement.
Factors at Play
Solid demand for crop-yield enhancing products (like Roundup Ready 2 Xtend soybeans) and specialized glyphosate-based herbicides (like XtendiMax) are anticipated to bolster Monsanto’s sales. In addition, ongoing research and development investments will also likely aid the top line growth going forward. The Zacks Consensus Estimate for first-quarter revenues from the company’s Agricultural Productivity and Seeds and Genomics segments is currently pegged at $844 million and $1,926 million, respectively, higher than $802 million and $1,848 million recorded in the year-ago quarter.
Moreover, Monsanto believes that its margins in fiscal 2018 will likely be stronger on the back of improved Intacta penetration and pricing in South America, gains secured from Precision Planning business spin-off (closed on Sep 5, 2017) and improved glyphosate pricing. The Zacks Consensus Estimate for gross profit of the company’s Agriculture Productivity and Seeds and Genomics segments are currently pegged at $146 million and $1,201 million, higher than $119 million and $1,140 million recorded in the year-ago quarter.
However, in the last 60 days, the Zacks Consensus Estimate for earnings has remained unchanged for both fiscal 2018 and 2019, reflecting neutral sentiments.
We fear that stiff rivalry within the global seeds, traits and agricultural chemical industry might dent Monsanto’s growth.
Moreover, Monsanto is a highly levered company with approximately $7.3 billion of long-term debt at the end of fiscal fourth-quarter 2017. We believe, if unchecked, such high debt levels will increase the company's financial obligations and impact its profitability.
Monsanto’s cost and sales are highly sensitive to commodity price fluctuations. For instance, weak agricultural products’ prices might continue to weigh on Monsanto’s revenues and margins.
Monsanto accepted Bayer AG’s (BAYRY - Free Report) buyout offer worth $66 billion, inclusive of debt, in September 2016. Both companies look to close the deal by early 2018.
Earnings Whispers
Our proven model does not conclusively show that Monsanto will likely beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. That is not the case here as we will see below.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: Monsanto currently has an Earnings ESP of 0.00%. This is because both the Zacks Consensus Estimate and the Most Accurate estimate are pegged at 38 cents per share.
Monsanto Company Price and EPS Surprise
Monsanto Company Price and EPS Surprise | Monsanto Company Quote
Zacks Rank: Monsanto carries a Zacks Rank #3. Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are two stocks within the industry that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Huntsman Corporation (HUN - Free Report) with an Earnings ESP of +1.04% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Air Products and Chemicals, Inc. (APD - Free Report) with an Earnings ESP of +0.78% and a Zacks Rank #2.
Zacks Editor-in-Chief Goes ""All In"" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Download it free >>