Stock of the Day

June 18, 2020

Archer-Daniels-Midland (ADM)

$46.96
-$0.29 (-0.6%)
Market Cap: $22.56B

About Archer-Daniels-Midland

Archer-Daniels-Midland Company engages in the procurement, transportation, storage, processing, and merchandising of agricultural commodities, ingredients, flavors, and solutions in the United States, Switzerland, the Cayman Islands, Brazil, Mexico, Canada, the United Kingdom, and internationally. It operates in three segments: Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. The company originates, merchandises, stores, and transports agricultural raw materials, such as oilseeds and soft seeds. It also engages in the agricultural commodity and feed product import, export, and distribution; and various structured trade finance activities. In addition, the company offers soybean meal and oil; vegetable and salad oils and protein meals; ingredients for the food, feed, energy, and industrial customers; margarine, shortening, and other food products; and partially refined oils to produce biodiesel and glycols for use in chemicals, paints, and other industrial products. Further, it provides peanuts, peanut-derived ingredients, and cotton cellulose pulp; sweeteners, corn and wheat starches, syrup, glucose, wheat flour, and dextrose; alcohol, and other food and animal feed ingredients; ethyl alcohol and ethanol; corn gluten feed and meal; distillers' grains; corn germ; and citric acids. Additionally, the company provides proteins, natural flavors, flavor systems, natural colors, emulsifiers, soluble fiber, polyols, hydrocolloids, probiotics, prebiotics, postbiotics, enzymes, and botanical extracts; and other specialty food and feed ingredients; edible beans; formula feeds, and animal health and nutrition products; and contract and private label pet treats and food products. It also offers futures commission merchant; commodity brokerage services; cash margins and securities pledged to commodity exchange clearinghouse; and cash pledged as security under certain insurance arrangements. The company was founded in 1902 and is headquartered in Chicago, Illinois.

Archer-Daniels-Midland Bull Case

Here are some ways that investors could benefit from investing in Archer-Daniels-Midland Company:

  • The current stock price is around $52, which reflects a consensus rating of "Hold" from analysts, indicating potential stability in the investment.
  • Archer-Daniels-Midland Company has a solid return on equity of 10.44%, suggesting effective management and profitability relative to shareholder equity.
  • The company recently announced a quarterly dividend of $0.51 per share, translating to an annualized dividend yield of approximately 4.23%, providing a steady income stream for investors.
  • Despite a year-over-year revenue decline, the company reported earnings per share of $0.70, slightly beating analyst expectations, which may indicate resilience in its operations.
  • Analysts have varying price targets, with some firms upgrading their ratings, suggesting potential for price appreciation in the stock.

Archer-Daniels-Midland Bear Case

Investors should be bearish about investing in Archer-Daniels-Midland Company for these reasons:

  • The company experienced a revenue decline of 7.7% compared to the same quarter last year, which may raise concerns about its growth prospects.
  • Analysts have set a consensus price target of $52, indicating limited upside potential in the near term, which may not attract aggressive investors.
  • The net margin of 2.10% is relatively low, suggesting that the company may face challenges in maintaining profitability amidst competitive pressures.
  • Several analysts have issued sell or underperform ratings, reflecting skepticism about the company's future performance and market position.
  • The dividend payout ratio is currently at 72.86%, which may indicate that a significant portion of earnings is being distributed to shareholders, potentially limiting reinvestment in growth opportunities.
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