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Why Is ADM (ADM) Up 2.8% Since Last Earnings Report?
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It has been about a month since the last earnings report for Archer Daniels Midland (ADM - Free Report) . Shares have added about 2.8% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important drivers.
Archer Daniels’ Q1 Earnings Beat Estimates, Revenues Down
Archer Daniels posted first-quarter 2024 results, with the top line missing the Zacks Consensus Estimate and the bottom line beating the same. Both metrics declined year over year.
Adjusted earnings of $1.46 per share in the first quarter outpaced the Zacks Consensus Estimate of $1.35. However, the figure declined 30% from earnings of $2.09 per share in the year-ago quarter. On a reported basis, Archer Daniels’ earnings were $1.42 per share, down 33% from the year-ago quarter’s $2.12.
Revenues fell 9.5% year over year to $21.8 billion and missed the consensus estimate of $22.4 billion.
Segment-wise, revenues for Ag Services & Oilseeds fell 7.3% year over year and Carbohydrate Solutions’ revenues dropped 24.1% year over year. Also, Nutrition witnessed a year-over-year revenue dip of 0.9%.
Meanwhile, we projected revenues for Ag Services & Oilseeds and Carbohydrate Solution segments to decline 7.9% and 9.1%, respectively. We estimated Nutrition revenues to drop 2%.
The gross profit decreased 19% year over year to $1.7 billion but exceeded our estimate of $1.6 billion. Meanwhile, the gross margin fell 100 basis points to 7.6% in the quarter. The metric fared better than our estimate of 7.1%. SG&A expenses rose 7.9% year over year to $951 million. We expected SG&A expenses to edge up 1.3%.
Archer Daniels reported an adjusted segmental operating profit of $1.3 billion, down 24% from the year-ago quarter. On a GAAP basis, ADM’s segmental operating profit fell 24% year over year to $1.3 billion.
Segmental Operating Profit
Adjusted operating profit for Ag Services & Oilseeds fell 29% year over year to $864 million. The decline was driven by the stabilization of trade flows leading to lower Global Trade and risk management results year over year. Slow farmer selling hurt export volumes and margins in South America. In the Crushing subsegment, operating profit fell 27% year over year as increased imports of used cooking oil and the anticipation of large South American supplies weighed on North American soy crush margins. Equity earnings from Wilmar were about 37% higher year over year.
The Carbohydrate Solutions segment’s adjusted operating profit decreased 11% year over year to $248 million. The Starches and Sweeteners sub-segment fell $52 million as robust starches and sweeteners margins were offset by reduced domestic ethanol margins owing to strong industry production and elevated stocks, along with moderating margins in the EMEA region. In the Vantage Corn Processing subsegment, results improved by $21 million year over year on solid demand for sustainably certified exports of ethanol-supported volumes and increased margins.
In the Nutrition segment, the adjusted operating profit of $84 million plunged 39% from $138 million in the year-ago quarter. The Human Nutrition segment’s operating profit was $76 million, about $62 million lower than the year-ago period, due to the impacts of the unplanned downtime at Decatur East and a normalizing texturants market, which hurt margins. In the Animal Nutrition subsegment, operating profit of $8 million was higher year over year as cost-optimization efforts and reduced input costs boosted margins.
Other Financials
It ended the quarter with cash and cash equivalents of $830 million; long-term debt, including current maturities, of $8.2 billion; and shareholders’ equity of $23.2 billion. As of Mar 31, 2024, ADM provided $700 million in cash for operating activities. It repurchased shares worth $1.3 billion and cash dividends of $257 million in first-quarter 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -5.59% due to these changes.
VGM Scores
Currently, ADM has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, ADM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is ADM (ADM) Up 2.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Archer Daniels Midland (ADM - Free Report) . Shares have added about 2.8% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important drivers.
Archer Daniels’ Q1 Earnings Beat Estimates, Revenues Down
Archer Daniels posted first-quarter 2024 results, with the top line missing the Zacks Consensus Estimate and the bottom line beating the same. Both metrics declined year over year.
Adjusted earnings of $1.46 per share in the first quarter outpaced the Zacks Consensus Estimate of $1.35. However, the figure declined 30% from earnings of $2.09 per share in the year-ago quarter. On a reported basis, Archer Daniels’ earnings were $1.42 per share, down 33% from the year-ago quarter’s $2.12.
Revenues fell 9.5% year over year to $21.8 billion and missed the consensus estimate of $22.4 billion.
Segment-wise, revenues for Ag Services & Oilseeds fell 7.3% year over year and Carbohydrate Solutions’ revenues dropped 24.1% year over year. Also, Nutrition witnessed a year-over-year revenue dip of 0.9%.
Meanwhile, we projected revenues for Ag Services & Oilseeds and Carbohydrate Solution segments to decline 7.9% and 9.1%, respectively. We estimated Nutrition revenues to drop 2%.
The gross profit decreased 19% year over year to $1.7 billion but exceeded our estimate of $1.6 billion. Meanwhile, the gross margin fell 100 basis points to 7.6% in the quarter. The metric fared better than our estimate of 7.1%. SG&A expenses rose 7.9% year over year to $951 million. We expected SG&A expenses to edge up 1.3%.
Archer Daniels reported an adjusted segmental operating profit of $1.3 billion, down 24% from the year-ago quarter. On a GAAP basis, ADM’s segmental operating profit fell 24% year over year to $1.3 billion.
Segmental Operating Profit
Adjusted operating profit for Ag Services & Oilseeds fell 29% year over year to $864 million. The decline was driven by the stabilization of trade flows leading to lower Global Trade and risk management results year over year. Slow farmer selling hurt export volumes and margins in South America. In the Crushing subsegment, operating profit fell 27% year over year as increased imports of used cooking oil and the anticipation of large South American supplies weighed on North American soy crush margins. Equity earnings from Wilmar were about 37% higher year over year.
The Carbohydrate Solutions segment’s adjusted operating profit decreased 11% year over year to $248 million. The Starches and Sweeteners sub-segment fell $52 million as robust starches and sweeteners margins were offset by reduced domestic ethanol margins owing to strong industry production and elevated stocks, along with moderating margins in the EMEA region. In the Vantage Corn Processing subsegment, results improved by $21 million year over year on solid demand for sustainably certified exports of ethanol-supported volumes and increased margins.
In the Nutrition segment, the adjusted operating profit of $84 million plunged 39% from $138 million in the year-ago quarter. The Human Nutrition segment’s operating profit was $76 million, about $62 million lower than the year-ago period, due to the impacts of the unplanned downtime at Decatur East and a normalizing texturants market, which hurt margins. In the Animal Nutrition subsegment, operating profit of $8 million was higher year over year as cost-optimization efforts and reduced input costs boosted margins.
Other Financials
It ended the quarter with cash and cash equivalents of $830 million; long-term debt, including current maturities, of $8.2 billion; and shareholders’ equity of $23.2 billion. As of Mar 31, 2024, ADM provided $700 million in cash for operating activities. It repurchased shares worth $1.3 billion and cash dividends of $257 million in first-quarter 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -5.59% due to these changes.
VGM Scores
Currently, ADM has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, ADM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.