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Monsanto Beats, Guides High - Analyst Blog

Posted
1/5/2012 4:31:00 PM
By: Zacks.com
Referenced Stocks:DOW;MON;SMG;SYT

Monsanto Company ( MON ) posted a strong financial result in the first quarter of fiscal 2012 with an EPS (excluding restructuring expense) of 23 cents, breezing past a meager 2 cents recorded a year ago. The result exceeded the Zacks Consensus Estimate of 19 cents.

The company generated revenues of $2,439 million, up from $1,836 million registered in the year-ago quarter. The revenue exceeded the Zacks Consensus Estimate of $2,034 million based on improved sales in the growing Latin America market. 

On a segmental basis, revenues from the Seeds and Genomics segment was recorded at $1,534 million, up 32% compared with $1,163 million in the year-ago quarter.

The segment's improved result was driven by volume growth and a mix benefit from significant corn trait expansion in Brazil and Argentina. Benefits from the Australian cotton business added to the perk. Agricultural Productivity segment's revenues came in at $905 million versus $673 million a year ago.

During the quarter, gross margin was recorded at approximately 45%, in line with that of the year-ago comparable quarter.

Selling, general and administrative expenses were up 11.1% year over year to $500 million. Research & Development (R&D) grew 15.8% year over year to $351 million.

Cash and cash equivalents at the end of 1Q12 were approximately $3,007 million as of November 30, 2011 versus $2,572 million as of August 31, 2011. Long-term debt was recorded at $1,542 million, down marginally from $1,543 million at the end of the previous sequential quarter.

Net Cash provided by Operating Activities was recorded at $1,110 million versus $624 million, a year ago.

Free cash flow increased to $856 million during the quarter ended November 30, 2011 compared with $500 million reported a year ago.

Outlook

Management affirmed its free cash flow guidance for fiscal 2012 in the range of $1.3 billion to $1.5 billion, reflecting an investment of $600 to $700 million in capital expenditures. 

For fiscal 2012, the company expects net cash provided by operating activities to be $2.2 billion to $2.5 billion, and net cash required by investing activities to be approximately $900 million to $1 billion.

The company guided high on full-year 2012 ongoing EPS, expecting to achieve $3.39 to $3.44 of ongoing and as-reported EPS. 

Going forward, a strong US Order book coupled with a pipeline of advanced R&D appears to add momentum to the stock.

During early December 2011, Monsanto Company declared a quarterly dividend on its common stock of $0.30 per share. The dividend will be payable on January 27, 2012 to shareowners of record as of January 6, 2012. 

Monsanto Company is a leading global provider of agricultural products for farmers, operating in Seeds and Genomics and Agricultural Productivity segments. Monsanto's biotechnology research and innovations position it as a market leader above its peers, such as Syngenta AG ( SYT ) and The Dow Chemical Company ( DOW ).

We currently maintain a long-term Outperform recommendation on the stock. Monsanto has a Zacks #2 Rank, which translates into a short-term Buy rating (1-3 months).


 
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