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Archer-Daniels Midland Co ADM

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Raising Archer-Daniels Midland FVE to $50 on Improved Near-Term Nutrition Outlook; Shares Overvalued

Seth Goldstein, CFA Senior Equity Analyst

Analyst Note

| Seth Goldstein, CFA |

Archer Daniels Midland reported strong second-quarter earnings as adjusted segment operating profit was up over 44% year on year as all three segments showed improved profits. We had largely expected higher profits across the board as higher crop prices create favorable grain merchandising conditions for the ag services and oilseeds business, while ethanol and ingredient demand continues to strengthen as COVID-19-related restrictions ease. However, we have increased our outlook for the firm's nutrition business as we think the company's improving portfolio of specialty ingredients will position it for higher growth over the next several years. Having updated our model to reflect these changes, we raise our fair value estimate to $50 per share from $49. Our no-moat rating is unchanged.

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Company Profile

Business Description

Archer Daniels Midland is a major processor of oilseeds, corn, wheat, and other agricultural commodities. Additionally, the company owns an extensive network of logistical assets to store and transport crops around the globe. ADM also runs a nutrition business that focuses on both human and animal ingredients.

Contact
77 West Wacker Drive, Suite 4600
Chicago, IL, 60601
T +1 312 634-8100
Sector Consumer Defensive
Industry Farm Products
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 30, 2020
Stock Type Slow Growth
Employees 39,088

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