Chicago, Illinois-based Archer-Daniels-Midland Company (ADM) procures, transports, stores, processes, and merchandises agricultural commodities, ingredients, flavors, and solutions. With a market cap of $25 billion, the company’s operations span the U.S., Switzerland, the Cayman Islands, Brazil, Mexico, Canada, the United Kingdom, and internationally.
The agriculture major has substantially underperformed the broader market over the past year. Over the past 52 weeks, ADM dipped 27.8% trailing behind the S&P 500 Index’s ($SPX) 35.9% returns. In 2024 alone, ADM declined 27.5% compared to SPX’s 25.8% gains on a YTD basis.
Zooming in further, ADM also underperformed the VanEck Agribusiness ETF’s (MOO) 2.2% dip over the past 52 weeks and 6.6% decline in 2024.
Archer-Daniels-Midland had a bad start to the year, its stock experienced the biggest one-day drop since 1929, plummeting over 24% on Jan. 22 after the company placed its CFO Vikram Luthar on administrative leave as it started investigating accounting practices at its Nutrition segment. This created panic among investors leading to a massive sell-off.
More recently, ADM plunged nearly 6% in the trading session after the release of its preliminary Q3 results on Nov. 4. Due to softer market conditions ADM’s profitability has taken a sharp hit, it expects to report a 39.8% year-over-year drop in adjusted net earnings to $530 million for the quarter. ADM has experienced a drop in operating profits across all segments, with its Ag Services and Oilseeds segment’s operating profit declining as much as 43% year-over-year to $480 million. Observing the lackluster performance during the quarter, ADM lowered its full-year adjusted EPS guidance to $4.50 to $5, making investors jittery.
For the current fiscal year, ending in December, analysts expect ADM to report a 29.8% year-over-year decline in adjusted EPS to $4.90. ADM’s earnings surprise is mixed. It missed Wall Street’s earnings estimates twice over the past four quarters while missing on two other occasions. ADM’s adjusted EPS of $1.03 for the last reported quarter missed analysts’ bottom-line estimates by a staggering 16.3%.
ADM has a consensus “Hold” overall. Among the nine analysts covering the stock, eight recommend “Hold,” and one advises a “Strong Sell” rating.
This configuration has been mostly stable over the past three months.
On Nov. 5, Morgan Stanley (MS) analyst Steven Haynes maintained a “Hold” rating on AMD with a price target of $57.
ADM’s mean price target of $60.12 represents a premium of 14.8% to current price levels. Meanwhile the Street-high target of $66 suggests a potential upside of 26.1%.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
