Archer Daniels Midland Company ADM is slated to report second-quarter 2024 results on Jul 30 before market open. The company is likely to report bottom and top-line declines when it posts the quarterly results.
The Zacks Consensus Estimate for the company’s earnings is pegged at $1.29 per share, which indicates a decrease of 31.8% from the year-ago quarter’s reported figure. The consensus mark has fallen 3.7% in the past 30 days. For revenues, the consensus mark is pegged at $23.2 billion, implying a 7.8% dip from the year-ago quarter’s reported figure.
In the last reported quarter, the company delivered an earnings surprise of 8.2%. Its earnings outperformed the Zacks Consensus Estimate by 7.9%, on average, in the trailing four quarters.
Key Factors to Note
Archer Daniels’ quarterly performance is likely to have been hurt by numerous headwinds like tough market conditions, higher costs, supply-chain complexity, inflation and soft demand. The company has been struggling with higher selling, general & administrative (SG&A) and corporate expenses for a while now. We expect SG&A expenses to increase 5% year over year. As a percentage of sales, the metric is likely to expand 50 basis points to 3.8%.
A sluggish Nutrition segment, driven by headwinds in specialty ingredients and softness in business, is expected to have further weighed on the performance. The impacts of the unplanned downtime at Decatur East and a normalizing texturants market have been hurting the human nutrition unit’s margins. Management, in its lastearnings call had anticipated the Nutrition segment’s quarterly revenues to be lower year over year owing to headwinds in specialty ingredients.
For the Ag Services & Oilseeds segment, management had expected second-quarter revenues to be significantly lower compared with the year-earlier levels. It further anticipated the average global soy crush margin toward the lower end of the anticipated range as the market balances robust soybean availability against higher crush capacity. Our model expects a revenue drop of 6.9% for the Ag Services & Oilseeds division.
On the flip side, Archer Daniels is actively managing productivity and innovation and is focused on food security, health and well-being. The company has been significantly progressing on its three strategic pillars, optimize, drive and growth. Further, the easing of commodity prices, robust ethanol demand and moderating global soybean crush margins are expected to have acted as tailwinds. In its first-quarterearnings call for the second quarter, management had anticipated Carbohydrate Solutions’ revenues to be higher year over year, driven by robust demand and margins in North American starches and sweeteners, somewhat offset by moderating margins in wheat milling and international corn milling.
Valuation Picture
From a valuation perspective, Archer Daniels offers an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 11.30x, which is below the five-year high of 18.93x and the Agriculture - Operations industry’s average of 12.61x, the stock offers compelling value for investors seeking exposure to the sector.
The recent market movements show that ADM’s shares have risen 23.3% in the past six months compared with the industry's 14% growth.
What the Zacks Model Unveils
ur proven model does not conclusively predict an earnings beat for Archer Daniels this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Archer Daniels Midland Company Price and EPS Surprise
Archer Daniels Midland Company price-eps-surprise | Archer Daniels Midland Company Quote
Archer Daniels currently has an Earnings ESP of -6.44% and a Zacks Rank of 3.
Stocks With the Favorable Combination
Here are some companies, which according to our model, have the right combination of elements to beat on earnings this reporting cycle.
Coty COTY has an Earnings ESP of +22.73% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is expected to register bottom and top-line growth when it reports fourth-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for COTY’s quarterly earnings has remained unchanged in the past 30 days at 5 cents per share. The consensus mark for earnings indicates a 400% surge from the figure reported in the year-ago quarter.
The Zacks Consensus Estimate for quarterly revenues is pegged at $1.38 billion, which indicates a rise of 1.9% from the figure reported in the year-ago quarter. COTY has delivered a negative earnings surprise of 22.2%, on average, in the trailing four quarters.
Clorox CLX currently has an Earnings ESP of +1.51% and a Zacks Rank of 3. The company is likely to register a bottom and top-line decline when it reports fourth-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.97 billion, implying a decline of 2.3% from the figure reported in the prior-year quarter. The consensus mark for earnings has risen a penny in the past seven days.
The Zacks Consensus Estimate for Clorox’s quarterly earnings of $1.54 implies a drop of 7.8% from the year-ago quarter’s levels. However, the company has a trailing four-quarter earnings surprise of 128.5%, on average.
Colgate CL currently has an Earnings ESP of +0.45% and a Zacks Rank of 3. The company is expected to register bottom and top-line growth when it reports second-quarter numbers. The Zacks Consensus Estimate for CL’s quarterly revenues is pegged at $5 billion, which indicates growth of 4.1% from the prior-year quarter’s reported figure.
The consensus estimate for Colgate-Palmolive’s quarterly earnings has remained unchanged in the past 30 days at 87 cents per share. The estimate indicates 13% growth from the year-ago reported quarter. CL has delivered an earnings surprise of 4.4%, on average, in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
