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Archer Daniels Midland Settles Lawsuit

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Price movement

Archer Daniels Midland (ADM) has a market cap of $24.8 billion. It fell by 1.8% to close at $42.56 per share on August 25, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -2.3%, -2.4%, and 18.8%, respectively, on the same day. ADM is trading 2.9% below its 20-day moving average, 0.89% below its 50-day moving average, and 12.3% 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 ETF (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 9.3% on August 25.

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

  • Bunge (BG) — $8.8 billion
  • Ingredion (INGR) — $9.7 billion

Latest news on ADM

In a press release on August 25, 2016, Bloomberg reported, “Archer-Daniels-Midland Co. settled in mid-trial a lawsuit claiming the company directed a Ponzi scheme by a former dealer who defrauded Missouri farmers.” The report quoted company spokeswoman Jackie Anderson, who said that “as part of the settlement agreement, ADM does not admit any wrongdoing,” adding that “the settlement is confidential and parties have agreed they will not disclose details of the agreement.”

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. In the next part, we’ll discuss Sanderson Farms (SAFM).

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