How Smart Investors Look at Archer-Daniels-Midland Company (ADM).

Now trading at a price of $72.62, Archer-Daniels-Midland Company has moved -1.5% so far today.

Archer-Daniels-Midland Company returned losses of -17.0% last year, with its stock price reaching a high of $98.28 and a low of $69.92. Over the same period, the stock underperformed the S&P 500 index by -37.0%. As of April 2023, the company's 50-day average price was $79.68. 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 2.3% dividend yield over the last 12 months, but this may not be sustainable seen that the company has a choppy cash flow record.

The Company Has a Positive Net Current Asset Value:

2017-12-31 2018-12-31 2019-12-31 2021-02-18 2022-02-17 2023-02-14
Revenue (MM) $60,828 $64,341 $64,656 $64,355 $85,249 $101,556
Gross Margins 6.0% 6.0% 6.0% 7.0% 7.0% 7.0%
Operating Margins 3% 3% 3% 3% 4% 4%
Net Margins 3.0% 3.0% 2.0% 3.0% 3.0% 4.0%
Net Income (MM) $1,595 $1,810 $1,379 $1,772 $2,709 $4,340
Net Interest Expense (MM) -$224 -$202 -$402 -$228 -$169 -$103
Depreciation & Amort. (MM) -$924 -$941 -$993 -$976 -$996 -$1,028
Earnings Per Share $2.79 $3.19 $2.44 $3.15 $4.79 $7.71
EPS Growth n/a 14.34% -23.51% 29.1% 52.06% 60.96%
Diluted Shares (MM) 572 567 565 563 566 563
Free Cash Flow (MM) -$5,112 -$4,133 -$4,917 -$2,291 $7,519 $4,666
Capital Expenditures (MM) -$854 -$651 -$535 -$95 -$924 -$1,188
Net Current Assets (MM) -$1,663 -$1,200 -$3,367 -$2,337 -$1,460 $252
Long Term Debt (MM) $6,623 $7,698 $7,672 $7,885 $8,011 $7,735
Net Debt / EBITDA 2.71 2.16 3.03 3.38 2.15 1.55

Archer-Daniels-Midland Company has weak revenue growth and a flat capital expenditure trend, weak operating margings with a positive growth rate, and just enough current assets to cover current liabilities. We also note that the company benefits from a strong EPS growth trend and healthy leverage. However, the firm suffers from slimmer gross margins than its peers and an unconvincing cash flow history.

Archer-Daniels-Midland Company Is Potentially Undervalued and Trades Below Its Graham Number:

Archer-Daniels-Midland Company has a trailing twelve month P/E ratio of 10.6, compared to an average of 24.36 for the Consumer Staples sector. Based on its EPS guidance of $6.65, the company has a forward P/E ratio of 12.0. The company doesn't provide forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 17.9%. On this basis, Archer-Daniels-Midland Company's PEG ratio is 0.59. Using instead the 10.0% weighted average of Archer-Daniels-Midland Company's earnings CAGR and the broader market's anticipated 5-year EPS growth rate, the company's PEG ratio is 1.06, which shows that its shares might be fairly priced. Additionally, the market is possibly undervaluing Archer-Daniels-Midland Company in terms of its equity because its P/B ratio is 1.56 whereas the sector average is 4.29. The company's shares are currently trading -16.6% below their Graham number.

Archer-Daniels-Midland Company Has an Average Rating of Buy:

The 13 analysts following Archer-Daniels-Midland Company have set target prices ranging from $80.0 to $117.0 per share, for an average of $98.31 with a buy rating. As of April 2023, the company is trading -19.0% away from its average target price, indicating that there is an analyst consensus of strong upside potential.

Archer-Daniels-Midland Company has a very low short interest because 0.9% of the company's shares are sold short. Institutions own 81.0% 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 Vanguard Group Inc, whose 12% stake in the company is worth $4,520,969,143.

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.