Skip to main content
hello world

Paid Post: Content produced by Motley Fool. The Globe and Mail was not involved, and material was not reviewed prior to publication.

Why Archer-Daniels-Midland Stock Was Falling Today

Motley Fool - Tue Apr 30, 11:57AM CDT

Shares of Archer-Daniels-Midland (NYSE: ADM) were heading lower today after the agricultural company missed top-line estimates in its first-quarter earnings report. It did beat profit expectations, but earnings still fell.

As a result, the stock was down 3.3% as of 11:05 a.m. ET on Tuesday.

Two people making rows for crops

Image source: Getty Images.

Falling prices weigh on results

As a grain processor and trader, ADM is sensitive to commodity prices, and falling prices due to an increase in supply have weighed on results. In the first quarter, revenue fell 9.3% to $21.8 billion, which was below estimates at $22.3 billion.

Not surprisingly, the decline in revenue pushed profits lower as adjusted segment operating profit fell 24% to $1.31 billion, and adjusted earnings per share (EPS) declined from $2.09 to $1.46, though that topped the analyst consensus at $1.36.

CEO Juan Luciano said, "ADM's solid first-quarter results showcased our team's ability to execute our strategy with agility in the face of anticipated challenging market conditions." The company is also focused on strategic initiatives like its Green Bison joint venture focused on soybean processing to create renewable diesel fuel.

What's next for ADM

The agricultural company maintained its earnings guidance for the year, calling for adjusted EPS of $5.25 to $6.25, which compares favorably with the analyst consensus at $5.57.

Price fluctuations are outside of its control, but investors could reward the company for its investments in green energy down the road. And the stock looks cheap, trading at forward price-to-earnings ratio around 10, given that ADM looks like a good bet to recover from the current weakness in the industry.

Should you invest $1,000 in Archer-Daniels-Midland right now?

Before you buy stock in Archer-Daniels-Midland, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Archer-Daniels-Midland wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

See the 10 stocks

*Stock Advisor returns as of April 30, 2024

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.