Heard this term on tv the other day and makes me realize adm should get an expansion of its p/e. p/e = 11 does not reflect the tremendous growth potential of this sector and this stock. My thinking is in the next few years agri stocks will have a return to popularity and p/e expansion will happen. I also think this will happen with energy companies as well. In the case of adm and ag stocks the growth factor and the relative stability of cash generation should give it more of a premium. jmho.
I see p/e for bg=80.9 and p/e for adm =11.2 I think fertillizer sales/prices for bg have been weak. Not suggesting adm will ever trade at p/e of 80, but could easily be 15 one day. Once the market twigs to the fact that adm is directly tied to population boom and generates great cash flows that are increasing and all the while is growing by acquistion as well more investors will flock to adm and grow its p/e as a good blue chip long term investment.
If I am right and there is a renaissance for the agriculture sector adm p/e should be pegged higher in the future. As more investors return to the ag sector for its growth and stability adm p/e should go higher. I dont know if adm trading at a p/e=15 is reasonble one day soon, but if so this would be a $40 stock today. my favorite long term pick