Monsanto Beats Estimates in 2Q13 - Analyst Blog

Monsanto Company ( MON ) reported strong results for fiscal second quarter 2013 with earnings of $2.73 per share, beating the Zacks Consensus Estimate of $2.55 by 7.1%. Earnings of this company, a leading provider of agricultural products also grew 19.7% year over year, driven by solid top line growth.

Following the solid second quarter results, Monsanto raised its earnings guidance for fiscal 2013.

Revenue: Monsanto generated revenues of $5.5 billion in the fiscal second quarter, an increase of 15.2%, driven by an improvement in its global corn business. The revenues also surpassed the Zacks Consensus Estimate of $5.3 billion by 2.8%.

On a segmental basis, revenue from the Seeds and Genomics segment increased 10.8% in the quarter to $4.3 billion, driven by an increase in corn seeds and traits net demand in Brazil and improving trends in the U.S seeds business.

Revenue from the Agricultural Productivity segment increased 36.7% in the quarter to $1.1 billion, driven by recovery in market environment.

Margins/Costs: During the quarter, gross margin was recorded at approximately 56.1%, indicating an increase of 90 basis points, from 57.0% registered in the year-ago comparable quarter.

Operating expenses were recorded at $958 million, up from $896 million recorded in the year-ago period.

Selling, general and administrative expenses and Research & Development, as a percentage of net sales, were in line with the year-ago quarter at 11.0% and 7.0%, respectively.

Balance Sheet: Exiting the fiscal second quarter, the company's cash and cash equivalents stood at approximately $4.4 billion versus $4.6 billion at the end of fiscal first quarter 2013. Long-term debt was recorded at $2.0 billion, down from $2.1 billion at the end of the previous quarter.

Outlook: Management increased its guidance for ongoing earnings per share in fiscal 2013 to be within a range of $4.40-$4.50 from the previously announced range of $4.30-$4.40 per share. Monsanto has maintained its free cash flow guidance to be within the range of $1.8-$2.0 billion.

The net cash provided by operating activities is expected to be in the range of $2.9-$3.3 billion while net cash required by investing activities is likely to be in the range of $1.1-$1.3 billion.

Monsanto currently carries a Zacks Rank #2 (Buy). Other stocks worth a look in the chemicals industry are CVR Partners LP ( UAN ) and Balchem Corp. ( BCPC ); both carrying a Zacks Rank #1 (Strong Buy), whereas, Eastman Chemical Co. ( EMN ) carries a Zacks Rank #2 (Buy).

BALCHEM CP CL-B (BCPC): Free Stock Analysis Report

EASTMAN CHEM CO (EMN): Free Stock Analysis Report

MONSANTO CO-NEW (MON): Free Stock Analysis Report

CVR PARTNERS LP (UAN): Free Stock Analysis Report

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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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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