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Archer Daniels (ADM) Q2 Earnings & Revenues Miss, Down Y/Y
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Archer Daniels Midland Company (ADM - Free Report) posted second-quarter 2024 results, wherein the bottom and top lines missed the Zacks Consensus Estimate. Both metrics declined year over year.
Adjusted earnings of $1.03 per share missed the Zacks Consensus Estimate of $1.23. Also, the figure declined 46% from earnings of $1.89 per share in the year-ago quarter. On a reported basis, Archer Daniels’ earnings were 98 cents per share, down 42.4% from the year-ago quarter’s $1.70.
Revenues fell 9.5% year over year to $22.2 billion and lagged the consensus estimate of $23.2 billion.
Segment-wise, revenues for Ag Services & Oilseeds fell 12.6% year over year to $17.3 billion and Carbohydrate Solutions’ revenues dropped 14.7% year over year to $2.9 billion. However, Nutrition witnessed year-over-year revenue growth of 3.2% to $1.9 billion.
Meanwhile, we projected revenues for Ag Services & Oilseeds and Carbohydrate Solution segments to decline 6.9% and 11.1%, respectively. We estimated Nutrition revenues to rise 0.7%.
Archer Daniels Midland Company Price, Consensus and EPS Surprise
The gross profit decreased 26.3% year over year to $1.4 billion but exceeded our estimate of $1.3 billion. Meanwhile, the gross margin fell 120 basis points to 6.3%. The metric fared better than our estimate of 5.7%. SG&A expenses rose 8.3% year over year to $0.9 billion. We expected SG&A expenses to increase 5%.
Archer Daniels reported an adjusted segmental operating profit of $1 billion, down 37% from the year-ago quarter.
Segmental Operating Profit
Adjusted operating profit for Ag Services & Oilseeds fell 56% year over year to $459 million. In South America Origination, weak farmer selling owing to a smaller crop in Mato Grosso, and increased logistics costs associated with industry take-or-pay contracts contributed to lower margins. North American Origination results were soft as higher supply from Brazil and Argentina shifted export competitiveness to South American origins, coupled with fewer carriers and trading opportunities in North America.
In the Crushing subsegment, global soybean crush margins fell, driven by more balanced supply and demand conditions and reduced soybean oil values due to increased imports of used cooking oil. There were negative mark-to-market timing impacts of nearly $15 million compared to $195 million of adverse impacts a year ago. Refined Products & Other results were also dull, as refining margins eased from the prior levels owing to the increased pre-treatment capacity and higher imports of used cooking oil. Biodiesel margins were soft year over year, thanks to lower LCFS and RIN values. Equity earnings from Wilmar were $68 million in the second quarter.
The Carbohydrate Solutions segment’s adjusted operating profit increased 12% year over year to $357 million. The Starches and Sweeteners sub-segment rose $22 million as robust starches and sweeteners margins coupled with increased volumes were offset by reduced domestic ethanol margins and soft margins in the EMEA region. In the Vantage Corn Processing subsegment, results rose $16 million on solid demand for exports of ethanol supported higher margins.
In the Nutrition segment, the adjusted operating profit of $109 million plunged 36% from $169 million in the year-ago quarter. The Human Nutrition subsegment’s operating profit was $103 million, roughly $82 million lower from the prior-year period, stemming from the impacts related to the unplanned downtime at Decatur East, a normalizing texturants market and increased manufacturing costs hurting margins. In the Animal Nutrition subsegment, the operating profit of $6 million increased year over year as cost optimization efforts and lower input costs aided margins.
Other Financials
This current Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $764 million; long-term debt, including current maturities, of $8.2 billion; and shareholders’ equity of $22.2 billion. As of Jun 30, 2024, ADM provided $700 million in cash for operating activities. It repurchased shares worth $1.3 billion and cash dividends of $257 million.
We note that shares of ADM have gained 8.1% in the past three months compared with the industry’s 4.5% growth.
Management reaffirmed its earlier earnings per share (EPS) guidance for the full year. It still envisions adjusted EPS in the band of $5.25-$6.25.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and EPS indicates growth of 24.8% and 177.1%, respectively, from the prior-year reported levels.
Vital Farms (VITL - Free Report) , which provides pasture-raised products, currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and EPS indicates growth of 24.9% and 66.1%, respectively, from the prior-year reported levels.
VITL has a trailing four-quarter average earnings surprise of 102.1%.
Post Holdings (POST - Free Report) , a consumer-packaged goods company, is involved in the production of refrigerated, foodservice and nutrition product categories. It currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for POST’s current financial-year sales and EPS indicates growth of 14.2% and 6.9%, respectively, from the year-ago reported figures.
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Archer Daniels (ADM) Q2 Earnings & Revenues Miss, Down Y/Y
Archer Daniels Midland Company (ADM - Free Report) posted second-quarter 2024 results, wherein the bottom and top lines missed the Zacks Consensus Estimate. Both metrics declined year over year.
Adjusted earnings of $1.03 per share missed the Zacks Consensus Estimate of $1.23. Also, the figure declined 46% from earnings of $1.89 per share in the year-ago quarter. On a reported basis, Archer Daniels’ earnings were 98 cents per share, down 42.4% from the year-ago quarter’s $1.70.
Revenues fell 9.5% year over year to $22.2 billion and lagged the consensus estimate of $23.2 billion.
Segment-wise, revenues for Ag Services & Oilseeds fell 12.6% year over year to $17.3 billion and Carbohydrate Solutions’ revenues dropped 14.7% year over year to $2.9 billion. However, Nutrition witnessed year-over-year revenue growth of 3.2% to $1.9 billion.
Meanwhile, we projected revenues for Ag Services & Oilseeds and Carbohydrate Solution segments to decline 6.9% and 11.1%, respectively. We estimated Nutrition revenues to rise 0.7%.
Archer Daniels Midland Company Price, Consensus and EPS Surprise
Archer Daniels Midland Company price-consensus-eps-surprise-chart | Archer Daniels Midland Company Quote
The gross profit decreased 26.3% year over year to $1.4 billion but exceeded our estimate of $1.3 billion. Meanwhile, the gross margin fell 120 basis points to 6.3%. The metric fared better than our estimate of 5.7%. SG&A expenses rose 8.3% year over year to $0.9 billion. We expected SG&A expenses to increase 5%.
Archer Daniels reported an adjusted segmental operating profit of $1 billion, down 37% from the year-ago quarter.
Segmental Operating Profit
Adjusted operating profit for Ag Services & Oilseeds fell 56% year over year to $459 million. In South America Origination, weak farmer selling owing to a smaller crop in Mato Grosso, and increased logistics costs associated with industry take-or-pay contracts contributed to lower margins. North American Origination results were soft as higher supply from Brazil and Argentina shifted export competitiveness to South American origins, coupled with fewer carriers and trading opportunities in North America.
In the Crushing subsegment, global soybean crush margins fell, driven by more balanced supply and demand conditions and reduced soybean oil values due to increased imports of used cooking oil. There were negative mark-to-market timing impacts of nearly $15 million compared to $195 million of adverse impacts a year ago. Refined Products & Other results were also dull, as refining margins eased from the prior levels owing to the increased pre-treatment capacity and higher imports of used cooking oil. Biodiesel margins were soft year over year, thanks to lower LCFS and RIN values. Equity earnings from Wilmar were $68 million in the second quarter.
The Carbohydrate Solutions segment’s adjusted operating profit increased 12% year over year to $357 million. The Starches and Sweeteners sub-segment rose $22 million as robust starches and sweeteners margins coupled with increased volumes were offset by reduced domestic ethanol margins and soft margins in the EMEA region. In the Vantage Corn Processing subsegment, results rose $16 million on solid demand for exports of ethanol supported higher margins.
In the Nutrition segment, the adjusted operating profit of $109 million plunged 36% from $169 million in the year-ago quarter. The Human Nutrition subsegment’s operating profit was $103 million, roughly $82 million lower from the prior-year period, stemming from the impacts related to the unplanned downtime at Decatur East, a normalizing texturants market and increased manufacturing costs hurting margins. In the Animal Nutrition subsegment, the operating profit of $6 million increased year over year as cost optimization efforts and lower input costs aided margins.
Other Financials
This current Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $764 million; long-term debt, including current maturities, of $8.2 billion; and shareholders’ equity of $22.2 billion. As of Jun 30, 2024, ADM provided $700 million in cash for operating activities. It repurchased shares worth $1.3 billion and cash dividends of $257 million.
We note that shares of ADM have gained 8.1% in the past three months compared with the industry’s 4.5% growth.
Management reaffirmed its earlier earnings per share (EPS) guidance for the full year. It still envisions adjusted EPS in the band of $5.25-$6.25.
Key Picks
Freshpet, Inc. (FRPT - Free Report) , a pet food company, has a trailing four-quarter average earnings surprise of 118.2%. FRPT currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and EPS indicates growth of 24.8% and 177.1%, respectively, from the prior-year reported levels.
Vital Farms (VITL - Free Report) , which provides pasture-raised products, currently sports a Zacks Rank of 1. The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and EPS indicates growth of 24.9% and 66.1%, respectively, from the prior-year reported levels.
VITL has a trailing four-quarter average earnings surprise of 102.1%.
Post Holdings (POST - Free Report) , a consumer-packaged goods company, is involved in the production of refrigerated, foodservice and nutrition product categories. It currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for POST’s current financial-year sales and EPS indicates growth of 14.2% and 6.9%, respectively, from the year-ago reported figures.