Archer Daniels Midland (ADM)

Hilo para Archer Daniels Midland aprovechando los resultados los resultados del último trimestre de 2016, con un BPA de 0.73$ (del cuatrimestre) que trae un incremento del dividendo del 6.6% (de 30 centavos a 32).

Buenas noticias, el incremento no es demasiado pero en todo caso supera la inflacion. Esto unido a su evolucion en bolsa la hacen una buena inversion. Me gustaria coger un nuevo paquete pero ha subido mucho respecto al precio q la compre, 33 $.

2.05.2017

cayendo el 9,18%

por esto: PERO FIJAOS QUE TIENE UN BEAT IN EARNINGS Y PROFITS respecto al año,pasado!!! curioso!

https://finance.yahoo.com/news/agri-trader-adms-profit-jumps-114225916.html

ADM sees weaker agricultural services outlook on trading woes, shares dive

ReutersMay 2, 2017
2 Comments
(Recasts; Adds segment outlook, context, CEO quote and updates share price)

By Karl Plume

CHICAGO, May 2 (Reuters) - U.S. agricultural trader Archer Daniels Midland Co on Tuesday cautioned that massive global grain stocks are making it difficult to turn a profit trading grain internationally, sending its shares plummeting despite reporting a higher first-quarter profit.

The warning highlighted a string of trading woes at ADM, which has shed several key traders and consolidated offices amid a global grains glut.

The Chicago-based agribusiness said the outlook for its agricultural services segment, its largest in terms of revenue, appeared weaker than it did at the beginning of the year.

The segment makes money buying, selling, storing, shipping and trading grains and oilseeds. It includes ADM’s global trading desk, which turned in another weak quarter with lower year-on-year earnings.

“We’re working very hard in ag services to continue to improve our operations. We have been or facing a couple of years of very strong headwinds into that business,” Chief Executive Juan Luciano said on a conference call with analysts.

“With ample stocks around the world, there is a very subdued environment for us to make profitable international trades,” he added.

ADM shares dropped more than 7.5 percent to $42.28.

The company will continue to analyze its trading operations for cost savings, but that most of the restructuring was done, he said.

The company said the profit outlook for its corn and soybean processing segments this year was stronger than earlier thought, offsetting the weaker view for agricultural services.

Brisk U.S. ethanol exports and strong U.S. grain exports following record corn and soybean harvests last autumn helped propel a 47-percent jump in net first-quarter earnings over last year’s weak first quarter.

Bumper crop harvests in South America are adding to the world grain oversupply, but slow selling in Brazil has kept U.S. exports competitive in the global marketplace. South American competition may be a challenge in the second half of 2017.

Excess world grain stocks remain headwinds for ADM and rivals Bunge Ltd, Cargill Inc and Louis Dreyfus Corp, collectively known as the ABCD companies that dominate global grain trading.

Net profit attributable to ADM rose to $339 million, or 59 cents per share, in the quarter ended March 31, from $230 million, or 39 cents a share, a year earlier.

Excluding items, the company earned 60 cents per share, missing the average estimate by 2 cents, according to Thomson Reuters I/B/E/S.

Revenue rose to $14.99 billion from $14.38 billion. (Additional reporting by Siddharth Cavale in Bangalore; Editing by Shounak Dasgupta and Bernard Orr)

2 reactions on ADM sees weaker agricultural services outlook on trading woes, shares dive

Post
Top Reactions

Randy
3 hours ago
Time to Buy! Back up the truck!
Reply
10

Randy
3 hours ago
Time to buy!

ADM Reports First Quarter Earnings of $0.41 per Share, $0.46 per Share on an Adjusted Basis

Second Quarter 2019 Earnings (01/08/2019)

3 Me gusta

A 37.70 USD está interesante en estos momentos.

2 Me gusta

En cada página que busco encuentro cifras distintas, pero me sale que el FCF de ADM es negativo. Hasta ahora no he invertido en ninguna empresa con este problema. Entiendo que esto significa que no genera el suficiente dinero como para compensar pérdidas, ¿no es así? ¿No es esto un grandísimo inconveniente, o es más normal de lo que parece?

2 Me gusta

Yo creo que parte de la respuesta puede estar en la temporalización. Dando por hecho que tus cálculos están bien hechos.

me sale que el FCF de ADM es negativo. No está contextualizado en un periodo de tiempo. (Parece que fuera siempre.)
¿cuando? ¿éste trimestre? ¿los ultimos 4 trimestres? ¿los últimos 4 años? ¿siempre?

CAUSA
¿Si fuera éste ultimo trimestre, se debe a alguna causa de un solo impacto, que pueda remitir o va a perpetuarse?

Igual aqui no sé si hay alguna respuesta:

Archer-Daniels-Midland’s Dip Means It’s Time To Load Up On This Food Giant

Summary

Archer-Daniels-Midland recently reported 2Q19, coming in at 2 misses for EPS and revenue, respectively, due to trade headwinds and other issues.

The drop in share price due to this quarterly report, in conjunction with the pressure from tariffs, means that the company is trading at multi-year lows.

I extend my position in the company - and I believe you should do the same.

As an investor, I’m a proponent of diversification. Next to positions of true high yield, I focus on owning dividend stalwarts and conservative names. Archer-Daniels-Midland Company (ADM) is one of these businesses, and I wrote about the company back in April of 2019 in the article titled “Archer-Daniels-Midland: People Gotta Eat”. The correct way to handle a company such as this which, when looking historically, dips at times only to swing back up once fears ebb away somewhat is, of course, to wait for a dip.

I believe this dip, or at the very least the beginning of one, has materialized at this time. Let me show you why.

In my original article, I spoke at length about the company’s fundamental business and their reportable segments. For more information on this, I recommend you visit that article.

The quarterly results for 2Q19 came in at:

A non-GAAP and GAAP EPS miss of $0.05 and $0.17, respectively.
A revenue miss of $490M.
Obviously, this isn’t good - but as I noted in my original thesis, the inherent cyclicality related both to trade as well as weather patterns are going to impact this company from time to time - and given the times we live in, I believe this seasonality and volatility to increase. However, that doesn’t mean that the fundamental business is broken - as I don’t believe it to be here.

Quarterly results for ADM were impacted by tariff fears and China reducing/eliminating US agro import as well as extreme weather patterns, coming to a total of $65M for the second quarter.

More on the structural side, the company is combining the Origination and Oilseed business into a single segment - Ag Services and Oilseeds - which will begin reporting in 3Q19. The company also bought the Ziegler Group, a German company providing citrus ingredients, complementing its purchase of the Florida Chemical Company. The global citrus flavor market is estimated to be at ~$8B and is expected to grow at 5% CAGR until 2025 - and I personally believe the company’s move into flavor to be a very smart ambition.

In terms of segment results, only the Nutrition segment came in at positive results for 2Q19, and at a bare growth to $117M ($114M). In addition to poor segment results across (most of) the board due to seasonality and macro, the company EPS was impacted by one-time asset impairment and restructuring charges, LIFO and tax reforms.

Looking at overall sector/company results beyond the Nutrition segment, we see negatives in:

Shipping/transportation down due to unfavorable weather conditions.

Negative high water condition impacts upon the Origination segment, which despite negative conditions performed (according to company data) well, when compared to the record-high 2Q18.

Competitiveness issues in the international markets for US products, including corn.
Carbohydrate solutions, including starches and sweeteners, saw similar pressure from weather patterns and water levels.

All of these incidents and effects contributed to lowering operating profit by 26% to $628M, a firm negative even if the comparison quarter was a record one.

So, it was simply a bad quarter in terms of most company results.

Positives & looking forward

However, I’m not necessarily opposed to bad quarters if these grant me the opportunity to invest in the company and provided the drop isn’t related to something fundamental. In this case, the drop is related to weather, trade, write-offs and other effects that, in this contributor’s opinion, should not only be considered seasonal and inherent to the business, but we should expect them more going forward.

As such, the drop in share price in ADM is something I actually like to see, given that it better represents some of the forward risk the company is facing in terms of trade and weather.

The possibility I eluded to in my article of a drop materialized, and I don’t believe the current quarterly EPS representative of the company’s long-term potential - as such, I believe the drop here to be an opportunity, or at the very least, the beginning of one.

There are also some positives for the company going forward, beyond a return to the norm for the company’s sectors.

China’s potential future demand for ethanol, which they have put in a mandate by 2020 due to the nation’s air quality, creating a demand of 50 billion gallons while being able to produce 2 billion gallons domestically, which cannot be supplied overnight by a whole lot of other players.

Chinese production shortfalls in corn, with inventories down more than 50% in a few years, with potential production shortfalls as the cause, in turn causing feed demand for companies like ADM.

The flip-side, of course, is that if the trade dispute persists, the company’s ethanol production will continue to be EBITDA-negative, which ADM has already stated isn’t acceptable and they’ll start taking refinery capacity offline if this goes on for too long. A lot of the company’s current catalysts are tied to the export market, and specifically China. Looking forward, if the situation is solved, we’ll see a return to better profits for ADM.

The company’s centralizing and simplifying ambitions continue to show effect in lowering CapEx. Next up is the simplification of origination and oilseeds, with the goal of similar results as when corn was put together with milling. According to the company, the aim isn’t strictly cost-saving and simplification through merging branches/HQs, but also the simplification of risk management processes and reducing the number of internal transactions (some, according to ADM, have up to 40% of transactions as internal, which of course goes down with simplification).

So, beyond a return to the norm in terms of macro, there are some positive catalysts and possibilities for the company going forward which will further strengthen the results. The growth initiatives are showing results, with Neovia leading the charge in nutrition and the company’s savings program is continuing to deliver results.

Risks

Investing in a company as heavily affected by the trade challenges as ADM, of course, carries with it significant risks. The tariff war may worsen, and as a result, exports to some of the company’s customers (mainly China) may continue to suffer. In addition, if the conflict keeps going on for too long, China may be forced to consider long-term alternatives for sourcing feed and food - they have already started importing from Brazil and other countries.

The core risk, in my view, is what happens with the Chinese/trade situation. I want to be clear, however, that even in the event that this continues, it’s my intention to keep increasing my exposure to this company, as my belief in their long-term viability, even regardless of China, remains strong.

However, investors need to consider risks, including these, when looking at an investment in the company - few companies are as weather/trade affected as ADM is, and the company is further investing in their Asia businesses as well.

Valuation

Because of the poor 2Q19, we have the following situation when looking at the company’s valuation.

The company rarely trades at or below fair value, as we can see above. While earnings are somewhat volatile, the overall historical trend is strong. The concerns seem evident above as well, with expectations for further softness in 2019.

A valuation of P/E ~12 and below, however, is a significant discount for a company that during strong years trades at earnings multiples closer to 18-19. The potential reward for investment here is significant.

For the company simply to return to the historical norm, and not even the company’s usual premium valuation, would garner market-beating returns until 2021. In order to invest here, I should say, however, that your stance should be that the trade war will eventually come to a mutually beneficial end - if it does not, I foresee fundamental problems in the company’s future as it will require some readjusting.

In addition, note also the company’s tendency to not meet or beat estimates, indicating volatility in both the earnings and uncertainty when forecasting this company. We’re not talking small misses either - but misses up to 60% of estimates.

The reason I’m not more bullish and not more strongly advocating a buy at this time is that I believe there may be a further short-term downside here if the solution to the trade troubles is longer in coming. If things looked to be getting solved, I doubt the company would be trading at this valuation, nor would you be rewarded as richly for taking the risk involved here.

Timing is everything when buying a company like ADM, as the seasonal volatility and dips/highs have a tendency both to reward the patient investors and punish the impatient. My own position in ADM is actually the very oldest NA position I own - bought as a lucky break more than 6 years back when I began putting my money in stocks. Naturally, that position is far in the green today, and I’ve been adding to it now and again the past few years - and continue intending to do so.

Thesis

If you’re looking to invest in ADM at this time, I believe you should be prepared for further weather-related volatility as well as some trade issues in the near future. You should, however, consider a turnaround likely either in short or long term and the trade issues with China to come to a close at some point during 2019 or 2020.

Me, I don’t much mind a lengthy turnaround to premium valuation. I’ve waited a long time for ADM to dip back down - now that it has, I’m a very happy buyer, and I consider the company’s strong fundamentals capable enough to handle any short-term volatility coming the company’s way.

Regardless if considering food, fuel, flavors or other areas - ADM is a player in several of them and has a strong, international footprint. Provided this doesn’t change going forward, this makes the company a buy-and-hold forever company in my book.

And it just got very cheap.

Thank you kindly for reading.

Recommendation

At a ~12 P/E-ratio, I consider ADM to be a “BUY”, while macroeconomic effects and climate/weather-related risks prevent me from going stronger in my recommendation at this time. Further weakness would make me buy more, and if the company drops to/below ~10 in P/E, I’ll revisit the thesis once again.

3 Me gusta

Los datos los saco principalmente de Morningstar, donde en el informe anual de 2018 me sale un FCF de -5,626 millones. Los cojo anuales porque el FCF trimestral no lo encuentro por ningún sitio, pero los Operating Cash Flows de los dos últimos trimestres me salen negativos (Q1: -2,04 y Q2: -0.68)

2 Me gusta

Financial results for the quarter ended September 30, 2019 (31/10/2019)

1 me gusta