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Tickers in this Article: ADM
On Tuesday, October 30, 2012, Archer Daniels (NYSE:ADM) will announce its first quarter earnings. The consensus analyst estimate has dropped from 50 cents a share to the current estimate of earnings of 46 cents a share.

Earnings are perhaps the single most studied number in a company's financial statements because they show a company's profitability. SEE: Can Earnings Guidance Accurately Predict The Future?

What to Expect: Whereas the consensus estimate was 64 cents three months ago, it has since fallen.

ADM is expected to beat last year's reported revenue of $21.9 billion and come in at $22 billion for the quarter. ADM is expected to report revenue of $92.12 billion for the fiscal year.

Company Performance: ADM reported a decline in revenue in the fourth quarter of the last fiscal year, ending a three-quarter growth streak. It fell 0.9% in the fourth quarter of the last fiscal year after rising 5.4%in the third quarter of the last fiscal year, 11.4% in the second quarter of the last fiscal year and 30.4% in the first quarter of the last fiscal year.

The P/E ratio for ADM is 14.6, below the industry average of 17.33. A low P/E might arise due to substantial inherent risk of the firm and its operations, poor return on equity, or improper valuation of the market. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock

The stock price has fallen 2.2% since July 27, 2012, from $27.54 to $26.93. ADM's best recent streak was when its price gained $2.82 per share between August 15, 2012 and October 18, 2012.

The Competition: Archer Daniels Midland processes feedstuffs including oilseeds, cocoa, corn, and wheat. The company also manufactures vegetable oil and protein meal, corn sweeteners, flour, ethanol, biodiesel, and other food and feed ingredients. Analysts generally consider ADM a hold, with five of nine analysts rating it as such. The rating has remained constant for the past three months.

The company's closest competitor in the food processing industry is General Mills (GIS). Analysts are less optimistic about ADM than about General Mills. Twelve out of 18 analysts rate the latter a buy compared to two of nine for the former.

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