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Archer Daniels (ADM) Looks Promising on Solid Growth Efforts
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Archer Daniels Midland Company (ADM - Free Report) is performing impressively on the back of solid focus on cost savings, Project Readiness, business portfolio management and a disciplined capital strategy. Moreover, the company remains confident about delivering stellar results in the fourth quarter of 2018, driven by improving market conditions, higher global demand and gains from U.S. tax reform.
So far this year, shares of this Zacks Rank #2 (Buy) have gained 14.6%, significantly outperforming the industry’s 0.8% growth.
Let’s delve deeper.
Growth Catalysts
Archer Daniels is focused on strengthening business through increased cost savings, a key component of its long-term strategy. Notably, the company targets $550 million in additional run rate cost savings over the next five years — including cost savings of $350 million from operational excellence and process enhancements, and about $200 million in incremental purchasing savings. The company generated more than $200 million on a run rate basis in the first nine months of 2018, comfortably reaching its $200-million operational cost-saving target for 2018.
Archer Daniels has long been enhancing its operational efficiency at its production and supply chain networks to minimize costs. In addition, the company is on track with its business transformation under its 1ADM program, which forms an integral part of Project Readiness. Notably, the company has progressed well through the first two phases of Readiness and is on track with the implementation phase. This program is expected to help management have a more coordinated approach toward driving business improvement, standardizing functions and enriching consumers’ experience. As part of this strategy, the company plans to allocate resources efficiently on more mature businesses and make prudent business investments.
Furthermore, Archer Daniels’ efforts to manage its business portfolio through acquisitions and divestitures are noteworthy. Recently, the company completed acquisitions of Rodelle and Protexin. It also remains on track to close the France-based Neovia buyout, which is expected to boost animal nutrition solutions for the feed industry. Archer Daniels also announced the GrainBridge joint venture to strengthen its Origination business. In the Oilseeds business, the company is on track to acquire certain assets of Algar Agro, mainly refining and packaging facilities in Brazil. It also completed the divestiture of its oilseeds operations in Bolivia. These are likely to solidify Archer Daniels’ portfolio, and help it focus on consumers and drive returns.
Quarterly Performances
Archer Daniels delivered earnings beat for the fourth straight quarter in the third quarter of 2018. It posted average positive earnings surprise of 26.9% for four quarters. Moreover, sales outpaced estimates in two of the trailing three quarters.
Robust growth strategies, along with solid sales across all segments except for the Carbohydrate Solutions division, are aiding quarterly results. Archer Daniels remains focused on five major platforms — animal nutrition, health & wellness, carbohydrates, human nutrition, and taste — to drive growth across its business. Going by segments, management expects impressive results at Origination, Oilseeds and Nutrition in 2018.
We believe the company to continue delivering solid performance on the back of its growth initiatives. Further, the company has a VGM Score of B which defines its inherent potential.
Want More Top-Ranked Consumer Staples Stocks? Check These
The Chefs' Warehouse, Inc. (CHEF - Free Report) has an impressive long-term earnings growth rate of 19% and carries a Zacks Rank #2 at present.
Lamb Weston Holdings, Inc. (LW - Free Report) outpaced earnings estimates in each of the last four quarters, the average surprise being 7%. Further, the company currently has a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Archer Daniels (ADM) Looks Promising on Solid Growth Efforts
Archer Daniels Midland Company (ADM - Free Report) is performing impressively on the back of solid focus on cost savings, Project Readiness, business portfolio management and a disciplined capital strategy. Moreover, the company remains confident about delivering stellar results in the fourth quarter of 2018, driven by improving market conditions, higher global demand and gains from U.S. tax reform.
So far this year, shares of this Zacks Rank #2 (Buy) have gained 14.6%, significantly outperforming the industry’s 0.8% growth.
Let’s delve deeper.
Growth Catalysts
Archer Daniels is focused on strengthening business through increased cost savings, a key component of its long-term strategy. Notably, the company targets $550 million in additional run rate cost savings over the next five years — including cost savings of $350 million from operational excellence and process enhancements, and about $200 million in incremental purchasing savings. The company generated more than $200 million on a run rate basis in the first nine months of 2018, comfortably reaching its $200-million operational cost-saving target for 2018.
Archer Daniels has long been enhancing its operational efficiency at its production and supply chain networks to minimize costs. In addition, the company is on track with its business transformation under its 1ADM program, which forms an integral part of Project Readiness. Notably, the company has progressed well through the first two phases of Readiness and is on track with the implementation phase. This program is expected to help management have a more coordinated approach toward driving business improvement, standardizing functions and enriching consumers’ experience. As part of this strategy, the company plans to allocate resources efficiently on more mature businesses and make prudent business investments.
Furthermore, Archer Daniels’ efforts to manage its business portfolio through acquisitions and divestitures are noteworthy. Recently, the company completed acquisitions of Rodelle and Protexin. It also remains on track to close the France-based Neovia buyout, which is expected to boost animal nutrition solutions for the feed industry. Archer Daniels also announced the GrainBridge joint venture to strengthen its Origination business. In the Oilseeds business, the company is on track to acquire certain assets of Algar Agro, mainly refining and packaging facilities in Brazil. It also completed the divestiture of its oilseeds operations in Bolivia. These are likely to solidify Archer Daniels’ portfolio, and help it focus on consumers and drive returns.
Quarterly Performances
Archer Daniels delivered earnings beat for the fourth straight quarter in the third quarter of 2018. It posted average positive earnings surprise of 26.9% for four quarters. Moreover, sales outpaced estimates in two of the trailing three quarters.
Robust growth strategies, along with solid sales across all segments except for the Carbohydrate Solutions division, are aiding quarterly results. Archer Daniels remains focused on five major platforms — animal nutrition, health & wellness, carbohydrates, human nutrition, and taste — to drive growth across its business. Going by segments, management expects impressive results at Origination, Oilseeds and Nutrition in 2018.
We believe the company to continue delivering solid performance on the back of its growth initiatives. Further, the company has a VGM Score of B which defines its inherent potential.
Want More Top-Ranked Consumer Staples Stocks? Check These
The Simply Good Foods Company (SMPL - Free Report) posted average positive earnings surprise of 11.4% in the trailing four quarters. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Chefs' Warehouse, Inc. (CHEF - Free Report) has an impressive long-term earnings growth rate of 19% and carries a Zacks Rank #2 at present.
Lamb Weston Holdings, Inc. (LW - Free Report) outpaced earnings estimates in each of the last four quarters, the average surprise being 7%. Further, the company currently has a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>