On Monday, Citi reiterated its Neutral rating on shares of Archer Daniels Midland (NYSE:ADM), maintaining a price target of $62.00. The firm anticipates that the company will announce its third-quarter earnings for 2024 in the last week of October.
Despite improved crush margins in North America and Europe compared to earlier in the year, Archer Daniels Midland's recent statements indicate that the third-quarter earnings per share (EPS) might not meet the consensus estimates, which Citi has factored into its models.
The analysis by Citi suggests that Archer Daniels Midland is expected to see a sequential rise in earnings in the fourth quarter, particularly in the Agricultural Services & Oilseeds (AS&O) segment. This projected improvement is anticipated to bring the company's full-year EPS closer to the lower end of its provided guidance range of $5.25 to $6.25 for 2024.
Archer Daniels Midland's performance in the AS&O segment is a significant contributor to the company's overall financial results. The segment's expected improvement in the fourth quarter is critical for the company to align with its annual EPS outlook.
The company's financial health and performance are closely monitored by investors, especially as the third-quarter earnings release approaches. Market participants will be looking for signs of whether the company's financial performance is on track to meet its yearly guidance.
Citi's analysis and expectations set a cautious yet watchful tone for investors as they await Archer Daniels Midland's upcoming earnings report and its implications for the company's financial trajectory in the remainder of the year.
In other recent news, Archer-Daniels-Midland Co (ADM) has reported notable developments. The company announced a temporary shutdown of its sole soybean processing facility in Iowa, which is expected to tighten the supply of soymeal.
This move comes amidst a record soy harvest in the U.S. and could impact local farmers and livestock feed buyers. The reason for the plant's closure remains undisclosed, but it follows a fire incident and a consent decree with the Iowa Department of Natural Resources.
In financial news, ADM has declared a cash dividend of 50 cents per share, marking its 371st consecutive quarterly dividend. This underscores the company's commitment to returning value to its shareholders. ADM also reported an adjusted earnings per share of $1.03 for the second quarter, with an adjusted segment operating profit of $1 billion, showcasing resilience amid challenging market conditions.
Furthermore, the company is expected to benefit from a surge in crop sales by U.S. farmers, primarily corn and soybeans harvested in 2023. This could provide cheaper soybean ownership for ADM and aid in using excess manufacturing capacity. However, agribusinesses like Corteva (NYSE:CTVA) Inc and Syngenta may face a short-term impact as farmers, facing tighter margins, are cutting back on crop chemicals.
These are the recent developments in ADM's operations.
InvestingPro Insights
As Archer Daniels Midland (ADM) approaches its third-quarter earnings announcement, InvestingPro data and tips offer additional context to Citi's analysis. ADM's current P/E ratio of 11.77 and adjusted P/E ratio of 9.99 for the last twelve months as of Q2 2024 suggest the stock is trading at a relatively low earnings multiple. This valuation metric aligns with Citi's cautious stance and may reflect market concerns about the company's near-term performance.
InvestingPro Tips highlight that ADM has maintained dividend payments for 54 consecutive years and has raised its dividend for 49 consecutive years. This impressive track record of dividend growth, coupled with a current dividend yield of 3.38%, may provide some reassurance to investors despite the anticipated earnings challenges.
The company's revenue for the last twelve months as of Q2 2024 stands at $88.77 billion, with a revenue growth of -11.13% over the same period. This decline in revenue supports Citi's concerns about ADM's ability to meet consensus estimates for the upcoming quarter.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips that could provide further insights into ADM's financial health and market position.
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