Chicago, Illinois-based Archer-Daniels-Midland Company (ADM) processes and merchandises agricultural commodities, ingredients, and solutions. Valued at $24.2 billion by market cap, the company engages in agricultural trade, structured finance, and the production of food and feed ingredients, offering oils, protein meals, sweeteners, starches, ethanol, and more.
The agribusiness giant is set to announce its fourth-quarter results before the market opens on Tuesday, Feb. 4. Ahead of the event, analysts expect ADM to report a non-GAAP profit of $1.07 per share, down a staggering 21.3% from $1.36 per share reported in the year-ago quarter. While the company beat or matched the consensus estimates twice in the last four quarters, it missed the forecasts on two other occasions.
For the full fiscal 2024, analysts expect ADM to report an adjusted EPS of $4.72, down 32.4% from $6.98 in fiscal 2023. In fiscal 2025, its earnings are expected to further decline 2.5% year-over-year to $4.60 per share.
Archer-Daniels-Midland stock prices have dipped 2.8% over the past 52-week period, substantially underperforming the S&P 500 Index’s ($SPX) 24.1% surge and the Consumer Staples Select Sector SPDR Fund’s (XLP) 8.4% gains over the same time frame.
Archer-Daniels-Midland’s underperformance stems primarily from the soft market conditions and the continued disappointing performance of its Agricultural Services & Oilseeds (AS&O) and Nutrition segments.
On Nov. 18, ADM shares closed down more than 1% after reporting its Q3 results. The company reported an 8.1% year-over-year decline in total revenues to $19.9 billion which substantially missed the Street’s expectations. Furthermore, its adjusted net income declined 39.8% compared to the year-ago quarter to $530 million.
Although the company aims to enhance performance and create value through productivity and operational improvements, the market conditions are expected to remain weak because of which earnings are expected to observe a continued decline.
Analysts remain cautious about the stock’s prospects. ADM has a consensus “Hold” rating overall. Out of 10 analysts covering the stock, eight advise a “Hold” rating, one suggests a “Moderate Sell,” and one recommends a “Strong Sell.” ADM’s mean price target of $54.67 indicates an 8.1% upside potential from the current levels.
