Archer-Daniels-Midland Q3 Earnings: Can NYSE:ADM Hit Its $0.72 EPS Target?

in EARNINGS/INVESTING IDEAS by

Archer-Daniels-Midland Company (NYSE:ADM) is scheduled to report Q3 earnings results after markets close for trading on October 29, 2020.

The company is expected to report earnings of $0.72/share on revenue of $16.693 billion. The consensus earnings per share (EPS) of $0.72/share is based on a poll of 13 analysts and represents a decline in eps of −6.4% over the same quarter last year, when the company reported earnings of $0.77/share.

The revenue forecast of $16.693 billion based on a poll of 9 analysts implies a year-over-year (YoY) decline in revenue of −0.2%. Last year the company reported $16.726 billion in revenue for the quarter.

Expected to report EPS contraction of −6.4% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $16,693.20 $16,726.00 −0.2%
EPS $0.72 $0.77 −6.4%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, and missed expectations 3 quarters.

What are your expectations from Archer-Daniels-Midland Company for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.51 $0.85 67.2% Beat
Q1, 2020 $0.56 $0.64 14.8% Beat
Q4, 2019 $0.73 $1.42 94.5% Beat
Q3, 2019 $0.71 $0.77 8.9% Beat
Q2, 2019 $0.65 $0.60 −7.7% Missed
Q1, 2019 $0.61 $0.46 −25.1% Missed
Q4, 2018 $0.92 $0.88 −4.5% Missed
Q3, 2018 $0.83 $0.92 11.1% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 1.8%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 29, 2020 $42.59 $43.36 1.8% Increase
April 29, 2020 $37.17 $37.14 −0.1% Decline
January 29, 2020 $43.92 $45.80 4.3% Increase
October 31, 2019 $40.53 $42.43 4.7% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −1.67, the model suggests that the company is likely an earnings manipulator. A value of −1.67 implies a 4.7% chance of earnings manipulation.

Fundamentals And Technical Analysis

Archer-Daniels-Midland Company is currently trading at $51.19/share, down −1.3% for the day. The company is trading at approximately 98.3% of its 52-week high of $52.05/share. The company’s stock price is up 18.1% since the last earnings report and up 0.6% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 65.26 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:ADM Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 16.06 and a forward P/E multiple of 16.90.

Archer-Daniels-Midland Company’s current share price also implies a price-to-book (P/B) multiple of 1.47. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $51.19
P/E Ratio 16.1x
P/E Ratio (Fwd) 16.9x
PEG Ratio 0.5
Total Debt / Total Capital 26.3%
Levered Free Cash Flow -$3.98 billion
EV / EBITDA 12.0x

Finbox

Archer-Daniels-Midland Company is a large-cap stock with a market capitalization of $28.444 billion and a total enterprise value of $37.638 billion. The company operates in the Consumer Staples sector and the Food Products industry.

Archer-Daniels-Midland Company procures, transports, stores, processes, and merchandises agricultural commodities, products, and ingredients in the United States and internationally. The company operates through three segments: Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. It procures, stores, cleans, and transports agricultural raw materials, such as oilseeds, corn, wheat, milo, oats, rice, and barley. The company also engages in the agricultural commodity and feed product import, export, and distribution; and structured trade finance activities. In addition, it offers vegetable oils and protein meals; ingredients for the food, feed, energy, and industrial customers; crude vegetable oils, salad oils, margarine, shortening, and other food products; and partially refined oils to produce biodiesel and glycols for use in chemicals, paints, and other industrial products. Further, the company provides peanuts, tree nuts, peanut-derived ingredients, and cotton cellulose pulp; sweeteners, corn and wheat starches, syrup, glucose, wheat flour, dextrose, and bioproducts; alcohol and other food and animal feed ingredients; ethyl alcohol and ethanol; corn gluten feed and meal, as well as distillers’ grains; and citric acids. Additionally, the company provides natural flavor ingredients, flavor systems, natural colors, proteins, emulsifiers, soluble fiber, polyols, hydrocolloids, and natural health and nutrition products, including probiotics, prebiotics, enzymes, and botanical extracts; and other specialty food and feed ingredients; edible beans; formula feeds, and animal health and nutrition products; and contract and private label pet treats and foods. It also engages in futures commission merchant and insurance services. The company has a partnership with Hospital de Sagunto. The company was founded in 1902 and is headquartered in Chicago, Illinois.

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