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ADM’s Revenue and EPS Estimated to Fall in Fiscal 4Q15

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Revenue and EPS estimates

Archer Daniels Midland (ADM) will be reporting its fiscal 4Q15 and 2015 earnings on February 2, 2016. Analysts expect the revenue and earnings to fall this quarter, and they lowered their previous estimates. The company is expected to report revenue of $19.4 billion, falling by 6.8% compared to fiscal 4Q14. The EPS (earnings per share) are expected to be $0.66 as compared to $1.00 in fiscal 4Q14. Analysts now anticipate EPS of $2.65 on revenue of $70.7 billion for fiscal 2015. We’ll discuss the company’s last quarter performance in the later part of the series.

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Stock performance since last quarter’s earnings

The shares have fallen 22% since the last quarter earnings release. ADM reported its third quarter fiscal 2015 results on November 3, 2015. The company’s stock didn’t react well to the results, falling by 7%. ADM’s shares have dropped 6% so far in 2016. The stock has fallen 30% in 2015. Its stock price movement on a year-to-date basis is -7.6%, and it’s trading at 8.3% on a trailing-five-day basis. The reason for the fall in the company’s stock price is the negative earnings growth and weaker sales in most of its operating segments.

On January 7, 2016, the stock’s rating was upgraded by Standpoint Research to “buy” from “hold.” Many market sources believe that the stock performance and the company results were impacted on the fear of family farmer bankruptcies. Farmers are facing difficulties because of lower export sales and high input costs for fertilizer and seeds. Also, the fall of 50% in corn prices in the past three years is worsening the situation for farmers. The stock closed at $33.7 on January 27.

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Peers in the industry

Archer Daniels Midland procures, transports, stores, processes, and merchandises agricultural commodities and products. It’s part of the food and agricultural industry and has its headquarters in Chicago, Illinois. Its peers in the industry include Bunge (BG), Ingredion (INGR), and Pinnacle Foods (PF). These stocks closed at $58.6, $89.4, and $41.6, respectively, on January 27. Bunge will report its fiscal 4Q15 results in the second week of February. Pinnacle will report in the fourth week of February whereas Ingredion will do so on January 28. The VanEck Vectors Agribusiness ETF (MOO) invests 6.4% in ADM. It also invests 3.0% in Bunge. The ETF closed at $42.5 on January 27. MOO’s year-to-date returns are -8.8%.

Series overview

In the next parts of the series, we’ll talk about ADM’s earnings trend, EPS estimates for fiscal 2015, and its moving averages. We’ll further do a recap of the company’s performance in its last reported third quarter of fiscal 2015, and have a look at analysts’ recommendations for the stock.

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