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Piper Jaffray Rated Archer Daniels Midland as ‘Neutral’

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Price movement

Archer Daniels Midland (ADM) has a market cap of $26.0 billion. It rose 0.33% to close at $45.74 per share on December 15, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -0.50%, 5.2%, and 28.6%, respectively, on the same day.

ADM is trading 3.2% above its 20-day moving average, 4.4% above its 50-day moving average, and 11.0% above its 200-day moving average.

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Related ETF and peers

The Consumer Staples Select Sector SPDR ETF (XLP) invests 1.4% of its holdings in ADM. The YTD price movement of XLP was 5.1% on December 15.

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

  • Bunge Limited (BG) — $9.9 billion
  • Ingredion (INGR) — $9.0 billion

ADM’s rating

On December 15, 2016, Piper Jaffray initiated its coverage of Archer Daniels Midland with a “neutral” rating and also set the stock’s price target at $46.00 per share.

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Latest news on ADM

On December 15, 2016, Reuters reported, “Archer Daniels Midland Co, one of the world’s biggest agricultural trading houses, has agreed to pay $25,000 to settle charges it broke rules in the US corn futures market, exchange operator CME Group Inc. said on Thursday.”

The report added, “The violations appeared to document rare instances in which ADM, one of the biggest US grain exporters, has been penalized by the CME, which owns the Chicago Board of Trade and other markets.”

Performance in 3Q16

Archer Daniels Midland reported 3Q16 revenue of $15.8 billion—a fall of 4.8% from revenue of $16.6 billion in 3Q15. The Oilseed Processing segment’s operating profit fell 57.0%, while the Agricultural Services Processing, Corn Processing, and WILD Flavors and Specialty Ingredients Processing segments’ operating profits rose 29.5%, 61.8%, and 4.3%, respectively, between 3Q15 and 3Q16. The company’s gross profit margin expanded by 40 basis points.

Its net income and EPS (earnings per share) rose to $341.0 million and $0.58, respectively, in 3Q16, compared to $252.0 million and $0.41 in 3Q15. The earnings include credit related to LIFO (last-in, first-out) inventory, charges of asset impairment, restructuring and settlements, and other charges. The company reported adjusted EPS of $0.59 in 3Q16, a fall of 1.7% from 3Q15.

Archer Daniels Midland’s cash and cash equivalents and operating working capital fell 2.6% and 7.4%, respectively, between 3Q15 and 3Q16. Its debt-to-equity ratio rose to 0.57x in 3Q16, compared to 0.55x in 3Q15.

Next, we’ll discuss McCormick & Company (MKC).

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