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Archer Daniels Midland Misses Consensus Earnings Estimates

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Reported earnings per share

Archer Daniels Midland (ADM) reported earnings per share (or EPS) of $0.60 in 3Q15, missing consensus analyst estimates by 18%. When compared to 3Q14, EPS has fallen by 30%. Analysts who follow ADM expect it to grow its earnings at an average annual rate of 5.8% over the next five years.

This year, analysts are forecasting a fall in earnings of -5.8% over last year. Analysts expect earnings growth next year to be 9.8% over this year’s forecast earnings.

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 Forward guidance

ADM did not offer financial guidance in its press release, but analysts’ consensus estimates for 4Q15 call for EPS of $0.96 on revenues of $20.9 billion. For the full year, analysts expect EPS of $3.02 on revenues of $74.6 billion.

Growth-enhancing strategies

In its Agricultural Services segment, ADM expanded its destination sales operations, opening offices in El Salvador and Guatemala.

In its Corn Processing segment in July, ADM acquired Lyrical Nutrition, an animal feed business that serves the dairy and swine markets primarily in Quebec. At the beginning of November, the company closed its Eaststarch acquisition, enabling it to better serve growing European demand.

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In its Oilseeds segment, the company closed the sale of its global cocoa business to Olam International. It also closed on its acquisition of AOR, an oil-bottling company based in Belgium. ADM expects this to allow it to reach the continental European retail and food service markets and to enhance its ability to export value-added products internationally.

The company also plans to add soy switch capacity to its rapeseed processing plant in Straubing, Germany.

In its Wild Flavors and Specialty Ingredients segment, ADM acquired Eatem Foods, a leading developer of savory flavors. This adds deep expertise in savory flavors and ethnic cuisines and broadens the company’s capabilities in the food service and private brand channels. ADM announced the construction of a state-of-the-art flavor lab and customer center in Cranbury, New Jersey.

ADM remains on track to deliver on its synergy targets, and the company continues to advance its construction projects in Brazil, China, Germany, India, and the United States. It has made great progress in the area of driving operational efficiencies.

Archer Daniels Midland’s peers in the industry are Campbell Soup (CPB), Hormel Foods (HRL), and Tyson Foods (TSN). They reported EPS of $0.43, $0.56, and $0.80, respectively, in their most recent quarters.

The First Trust Large Cap Growth Opportunities Alpha DEX ETF (FTC) and First Trust Value Line Dividend Index ETF (FVD) each invests 0.53% and 0.45% of its portfolio in CPB.

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