Analysts covering Archer-Daniels-Midland Company (NYSE:ADM) are predicting double-digit earnings per share growth of 26.77% over the following three years. With the recent EPS being $2.385, expected growth will push the upcoming EPS to $3.024. I am going to look at the latest data on ADM to assess whether this expected growth is reasonable. View our latest analysis for Archer-Daniels-Midland
Can we expect ADM to keep growing?
Analyst expectation from the stock’s 12 analysts is one of positive sentiment, with earnings estimated to expand from current levels of $2.385 to $3.024 over the next couple of years. This indicates a relatively solid earnings per share growth rate of 26.77% over the next few years, which is an optimistic outlook in the near term. In the same period revenue is predicted to grow from $62,264M to $66,792M and profit is predicted to escalate from $1,380M to $1,749M in the next couple of years, growing by 26.77%. However, margins look rather unappealing at the current levels of revenue and earnings.
Basis for the growth
The past can be a great indicator for future performance for a stock. We can determine whether this level of expected growth is highly excessive or whether the company has consistently exhibited strength. ADM’s earnings growth in the last five years was a weaker 4.38%, indicating a relatively more bullish outlook for the company in the near future. This belief may be supported by turnaround initiatives implemented in the past, or previous investments coming to fruition.
For ADM, I’ve put together three key aspects you should look at:
1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Valuation: What is ADM worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ADM is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of ADM? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.