ADM

Archer-Daniels-Midland Company (ADM) Surges 2.0% on High Volume, Trading Above Average Target Price

Archer-Daniels-Midland Company logged a 2.0% change during today's morning session, and is now trading at a price of $80.08 per share.

As of July 2023, the company's 50-day average price was $74.32. Archer-Daniels-Midland Company procures, transports, stores, processes, and merchandises agricultural commodities, products, and ingredients in the United States, Switzerland, the Cayman Islands, Brazil, Mexico, Canada, the United Kingdom, and internationally. Based in Chicago, IL, the large-cap Consumer Staples company has 40,360 full time employees. Archer-Daniels-Midland Company has returned a 2.1% dividend yield over the last 12 months, but this may not be sustainable seen that the company has a choppy cash flow record.

An Exceptionally Strong Balance Sheet:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $64,656 $64,355 $85,249 $101,848
Gross Margins 6.4% 6.9% 7.0% 7.4%
Operating Margins 2.6% 2.7% 3.5% 4.1%
Net Margins 2.13% 2.75% 3.18% 4.26%
Net Income (MM) $1,379 $1,772 $2,709 $4,340
Net Interest Expense (MM) -$210 -$251 -$169 -$103
Depreciation & Amort. (MM) -$993 -$976 -$996 -$1,028
Earnings Per Share $2.44 $3.15 $4.79 $7.97
EPS Growth n/a 29.1% 52.06% 66.39%
Diluted Shares (MM) 565 565 566 545
Free Cash Flow (MM) -$6,280 -$3,209 $5,426 $2,159
Capital Expenditures (MM) -$828 -$823 -$1,169 -$1,319
Net Current Assets (MM) -$3,367 $13,727 -$1,460 $252
Current Ratio 1.55 1.5 11.99 25.18
Long Term Debt (MM) $7,672 $7,885 $8,581 $8,677
Net Debt / EBITDA 2.95 3.07 1.93 1.28

Archer-Daniels-Midland Company has growing revenues and increasing reinvestment in the business and exceptional EPS growth. Additionally, the company's financial statements display an excellent current ratio and healthy leverage. However, the firm suffers from slimmer gross margins than its peers and an unconvincing cash flow history. Finally, we note that Archer-Daniels-Midland Company has weak operating margings with a positive growth rate.

A Lower P/B Ratio Than Its Sector Average but Trades Above Its Graham Number:

Archer-Daniels-Midland Company has a trailing twelve month P/E ratio of 9.3, compared to an average of 24.36 for the Consumer Staples sector. Based on its EPS guidance of $6.54, the company has a forward P/E ratio of 11.4. According to the 21.8% compound average growth rate of Archer-Daniels-Midland Company's historical and projected earnings per share, the company's PEG ratio is 0.43. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 10.3%. On this basis, the company's PEG ratio is 0.9. This suggests that its shares are undervalued. Additionally, the market is possibly undervaluing Archer-Daniels-Midland Company in terms of its equity because its P/B ratio is 1.76 whereas the sector average is 4.29. The company's shares are currently trading 16.7% above their Graham number.

Archer-Daniels-Midland Company Has an Analyst Consensus of Some Upside Potential:

The 13 analysts following Archer-Daniels-Midland Company have set target prices ranging from $82.9 to $117.0 per share, for an average of $96.45 with a buy rating. As of April 2023, the company is trading -22.9% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Archer-Daniels-Midland Company has a very low short interest because 1.2% of the company's shares are sold short. Institutions own 83.4% of the company's shares, and the insider ownership rate stands at 0.67%, suggesting a small amount of insider investors. The largest shareholder is the Vanguard Group, Inc., whose 11% stake in the company is worth $5,010,688,677.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

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