A month has gone by since the last earnings report for Archer Daniels Midland (ADM Quick QuoteADM - Free Report) . Shares have added about 4.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is ADM due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Archer Daniels Beats Earnings & Revenue Estimates in Q4

Archer Daniels Midland delivered impressive fourth-quarter 2021 results, wherein both the top and bottom lines advanced year over year. This marked the ninth straight quarter of adjusted operating profit growth.

Despite supply-chain headwinds, results gained from solid demand, improved productivity and product innovations. Robust crush margins, driven by the demand for meal and vegetable oil, and healthy ethanol market and persistent growth in the Nutrition segment, as well as contributions from its recent buyouts, bode well. Encouragingly, management expects positive momentum to continue in 2022.

Q4 Highlights

Adjusted earnings of $1.50 per share in the fourth quarter outpaced the Zacks Consensus Estimate of $1.36. The figure also grew 24% from $1.21 in the year-ago quarter. On a reported basis, the company’s earnings were $1.38 per share, up 13.1% from the prior-year quarter’s $1.22.

Revenues rallied 28.4% year over year to $23,090 million and surpassed the Zacks Consensus Estimate of $20,371 million. Solid sales across the majority of the segments contributed to the top line.

Segment-wise, revenues for the Ag Services & Oilseeds remained flat year over year, while Carbohydrate Solutions’ revenues grew more than two-folds. The Nutrition segments witnessed year-over-year revenue growth of 19%.

The gross profit increased 22% year over year to $1,650 million, while the gross margin contracted 40 basis points (bps) to 7.1% in the quarter under review. SG&A expenses rose 4.9% to $786 million.

Archer Daniels reported an adjusted segmental operating profit of $1,413 million in fourth-quarter 2021, up 23% from the year-ago quarter. On a GAAP basis, the company’s segmental operating profits grew 22% year over year to $1,388 million.

Segment Operating Profit Discussion

Adjusted operating profit at Ag Services & Oilseeds fell 2.9% year over year to $810 million. This is mainly due to high export margins in the prior-year quarter, which partly offset robust global trade stemming from solid risk management and improved global ocean freight.

The crushing business has witnessed strong demand for soybean meal and vegetable oil. On the flip side, adverse timing impacts and sluggishness in EMEAI hurt quarterly results to some extent. Operating results for Refined Products and Other improved year over year on the back of improved margins in EMEA and North America biodiesel as well as strong volumes and margins in North America for refined oils. These factors more than offset softness in South America due to the reduced biodiesel mandate.

The Carbohydrate Solutions segment’s adjusted operating profit surged more than two-folds to $428 million. Vantage Corn Processors performed well year over year, driven by sturdy fuel ethanol margins stemming from the solid demand as well as higher sales volumes as production at the two dry mills resumed. Meanwhile, starches and sweeteners remained drab due to rising input costs and lower wheat milling volumes.

In the Nutrition segment, the adjusted operating profit of $160 million grew 26% from $127 million in the year-ago quarter. The Human Nutrition unit gained from strength across all businesses. Continued momentum in Flavors, driven by improved product mix in EMEAI, and strong performance in North America, bodes well. The solid demand for plant-based proteins contributed to the Specialty Ingredients category. The Health & Wellness unit also witnessed robust quarterly growth, particularly in bioactives and fermentation. The animal nutrition unit grew significantly year over year, driven by strength in amino acids.

Other Financials

Archer Daniels ended the quarter with cash and cash equivalents of $943 million; long-term debt, including current maturities, of $8,581 million; and shareholders’ equity of $22,528 million.

In 2021, the company provided $6,595 million in cash for operating activities. It also announced a dividend hike of 8.1% to 40 cents, which is likely to be payable Mar 1, 2022, of shareholders’ record as of Feb 8. As of Dec 31, 2021, the company had 559,551,590 remaining shares.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

The consensus estimate has shifted 11.35% due to these changes.

VGM Scores

At this time, ADM has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise ADM has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.