Monsanto Company
(
MON
), an agricultural products manufacturer, reported fiscal first
quarter 2013 results which were well above the year ago results
as well as the Zacks Consensus Estimates.
We cover below the results of the recent earnings
announcement, as well as the subsequent analysts' estimate
revisions and the Zacks ratings for the short and long-term
outlook on the stock.
First Quarter Review
On Jan 8, Monsanto Company reported fiscal first quarter 2013
(ended Nov 30, 2012) earnings of 62 cents per share beating the
Zacks Consensus Estimate of 37 cents by a solid 68%. Earnings of
this company also grew a whopping 170% year over year, driven by
a solid top-line growth.
The company generated revenues of $2.9 billion in the first
quarter, an impressive increase of 20.5%, driven by improvement
in the Seeds and Genomics as well as Agricultural Productivity
segment. The revenues also surpassed the Zacks Consensus Estimate
of $2.6 billion.
During the quarter, gross margin increased 260 basis points
year over year to 47.5%.
Read our full coverage on this earnings report:
Monsanto Surpasses Estimates
Earnings Estimate Revisions - Overview
Fiscal earnings estimates have moved in both directions since
the earnings release, suggesting that analysts are circumspect
about the long-term performance of the company. We take a
look at the earnings estimate details.
Agreement of Estimate Revisions
In the last seven days, two of the sixteen earnings estimates
for 2013 have moved up, while none moved in the opposite
direction. For 2014, five of sixteen estimates have been revised
upwards, while one has gone down, over the same period.
Also, over the last thirty days, eleven of the sixteen
estimates have been revised upwards for 2013, with one going
down. A similar trend can be seen for 2014, where twelve of the
sixteen estimates have gone up with one moving in the opposite
direction, during the same time frame.
Magnitude of Estimate
Revisions
Earnings estimates for 2013 and 2014 have increased by four
cents each over the last seven days to $4.50 and $5.18 per share,
respectively. However, earnings have seen an increase of 2.7% and
2.4% for 2013 and 2014, respectively, over the last thirty days,
to settle at the above.
Our Take
We expect the company to perform well in the future due to its
corn as well as seed business, in regions like the US and Latin
America. Moreover, Monsanto's cost control initiatives are also
encouraging. Also, the impact of strong first quarter financials
makes us optimistic about the company's performance. However, the
increasing competition as well as the risk of currency rate
fluctuations adds to our concerns.
We maintain a Neutral recommendation on the stock. Currently,
MON has a Zacks Rank #2 (Buy). The company's prime competitor
Cosan Ltd.
(
CZZ
) has a Zacks Rank #1 (Strong Buy).
About Zacks Earnings Scorecard
As a PhD from MIT, Len Zacks proved over 30 years ago that
earnings estimate revisions are the most powerful force
impacting stock prices. He turned this ground breaking
discovery into two of the most celebrating stock rating systems
in use today. The Zacks Rank for stock trading in a 1 to 3
month time horizon and the Zacks Recommendation for long-term
investing (6+ months). These "Earnings Estimate Scorecard"
articles help analyze the important aspects of estimate
revisions for each stock after their quarterly earnings
announcements. Learn more about earnings estimates and our
proven stock ratings at http://www.zacks.com/education/
COSAN LTD-A (CZZ): Free Stock Analysis Report
MONSANTO CO-NEW (MON): Free Stock Analysis
Report
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