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Archer Daniels Midland Offers $1 Billion in Notes

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Price movement

Archer Daniels Midland Company (ADM) has a market cap of $26.0 billion. Its stock rose by 0.16% to close at $44.52 per share on August 8, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were 0.63%, 2.4%, and 23.5%, respectively, on the same day. ADM is trading 1.6% above its 20-day moving average, 3.6% above its 50-day moving average, and 16.7% above its 200-day moving average.

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Related ETFs and peers

The Vanguard Large-Cap ETF (VV) invests 0.13% of its holdings in ADM. The ETF tracks a market cap–weighted index that covers 85% of the market capitalization of the US equity market.

The Consumer Staples Select Sector SPDR Fund (XLP) invests 1.4% of its holdings in ADM. The ETF tracks a market cap–weighted index of consumer staples stocks drawn from the S&P 500. The YTD price movement of XLP was 9.2% on August 8.

The market caps of ADM’s competitors are as follows:

  • Bunge Limited (BG): $9.2 billion
  • Ingredion (INGR): $9.7 billion

Latest news on ADM

ADM has offered an aggregate principal amount of $1 billion in 2.50% notes due in 2026. The company reported, “The notes will be issued at a public offering price of 2.533%.” ADM expects the offer to close on August 11, 2016.

The net proceeds from the offering will be used for general corporate purposes and repayment of a portion of outstanding commercial paper debt.

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Moody’s rating of ADM’s senior unsecured notes

Moody’s Investors Service has rated ADM’s senior unsecured notes (regular bond/debenture) of $1 billion due in 2026 as “A2.” Moody’s kept the stock’s outlook as stable.

Archer Daniels Midland’s performance in 2Q16

Archer Daniels Midland reported 2Q16 revenues of $15.6 billion, a fall of 9.3% from revenues of $17.2 billion in 2Q15. The operating profit of agricultural services and oilseeds processing fell by 36.2% and 32.0%, respectively, and the operating profit of corn processing and wild flavors and specialty ingredients rose by 7.4% and 1.9%, respectively, between 2Q15 and 2Q16. The company’s gross profit margin fell by 13.7%.

Its net income and EPS (earnings per share) fell to $284.0 million and $0.48, respectively, in 2Q16, compared with $386.0 million and $0.62, respectively, in 2Q15. It reported adjusted EPS of $0.41, a fall of 31.7% from 2Q15.

ADM’s cash and cash equivalents and operating working capital fell by 61.5% and 1.2%, respectively, between 2Q15 and 2Q16. Its debt-to-equity ratio rose to 0.59x in 2Q16, compared with 0.54x in 2Q15.

Quarterly dividend

Archer Daniels Midland has declared a cash dividend of $0.30 per share on its common stock. The dividend will be paid on September 7, 2016, to shareholders of record on August 17, 2016.

In the next part of this series, we’ll discuss how Tyson Foods (TSN) performed in fiscal 3Q16.

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