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Monsanto’s 1Q18 Earnings: What Analysts Expect

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EBITDA margins

Earlier in this series, we saw how analysts expect Monsanto’s (MON) gross margins to improve YoY (year-over-year) from 54.3% to 55.1%. There are expectations that the improvement will trickle down. Margins are expected to improve more as we move down the income statement.

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Analysts’ estimates

In 1Q18, Wall Street analysts expect that Monsanto will report an EBITDA (earnings before interest, tax, depreciation, and amortization) of $0.55 billion, which will give an EBITDA margin of 19.9%. This is expected to grow from 18.5% in 1Q17.

For the next four quarters of 2018, analysts expect an EBITDA of $4.6 billion, which will translate into an EBITDA margin of 30.3%. It’s also expected to expand from 28.5% in fiscal 2017.

The EBITDA is estimated to grow as much as 11% YoY—similar to what we saw for gross margins and net sales. However, the EBITDA margins are expected to grow relatively faster than the gross income and sales. Most of the growth in the company’s margins is expected to come from meaningful growth in business operations with the EBIT estimated to grow 13% YoY.

Peers’ margins

Similar to Monsanto, its peer (MXI) FMC’s (FMC) EBITDA margins are estimated to expand YoY from 21.3% to 24.7% in the next four quarters. Scotts Miracle-Gro’s (SMG) EBITDA margins are estimated to grow slightly to 19.7% from 19.1%.

In contrast, Eastman Chemicals’ (EMN) EBITDA margins are estimated to fall from 23.4% to 22.5% YoY.

Next, we’ll see how these estimates will translate into earnings growth for Monsanto.

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