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Archer Daniels (ADM) to Report Q4 Earnings: What's in Store?

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Zacks Equity Research
·4 min read
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Archer Daniels Midland Company ADM is slated to report fourth-quarter 2020 results on Jan 26, before market open. This leading agricultural product company is likely to have witnessed revenue growth in the to-be-reported quarter. The Zacks Consensus Estimate for the company’s fourth-quarter revenues stands at $16.55 billion, indicating a 1.4% increase from the year-ago quarter’s reported figure.

For fourth-quarter revenues, the consensus mark is pegged at $1.04, suggesting a 26.8% decline from the prior-year quarter’s reported figure. However, the consensus mark has moved up by a penny in the past seven days.

In the last reported quarter, the company delivered an earnings surprise of 25.4%. Moreover, its earnings outperformed the Zacks Consensus Estimate by 48.1%, on average, in the trailing four quarters.

Archer Daniels Midland Company Price and EPS Surprise

 

Archer Daniels Midland Company Price and EPS Surprise
Archer Daniels Midland Company Price and EPS Surprise

Archer Daniels Midland Company price-eps-surprise | Archer Daniels Midland Company Quote

Key Factors to Note

Archer Daniels’ revenues in the fourth quarter are likely to have benefited from the strength and continued momentum in the Nutrition segment. The segment has been gaining from healthy demand for pet food and treats in the Animal Nutrition unit as well as strength of diversified portfolio and higher sales of North America flavors within the Human Nutrition division.

Notably, continued growth in flavors, plant-based proteins and probiotics has most likely driven the human-nutrition business, while synergies from the Neovia buyout and improvements in amino acids are expected to have contributed to animal-nutrition performance in the quarter under review.

In the last reported quarter, management remained optimistic about the Nutrition segment and predicted operating growth of 20% for fourth-quarter 2020.

In addition, Archer Daniels’ three strategic pillars — optimize the core, drive efficiency and grow strategically — as well as focus on Project Readiness bode well. Moreover, the company has been on track with its Strive 35 sustainability goals, probiotics expansion as reflected in the new state-of-the-art facility in Valencia and collaboration with Spiber in a bid to produce plant-based polymers. Driven by these initiatives, management anticipated reporting sturdy fourth-quarter results.

However, the company has been grappling with rising SG&A costs, which is likely to have impacted the bottom line in the fourth quarter of 2020. In addition, it has been witnessing soft results across its Carbohydrate Solutions segment for a while. These factors are expected to have weighed on the bottom line in the to-be-reported quarter.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Archer Daniels this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Archer Daniels has an Earnings ESP of -0.29% and carries a Zacks Rank #3.

Stocks With the Favorable Combination

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Corteva, Inc. CTVA has an Earnings ESP of +225.00% and it presently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Newell Brands NWL has an Earnings ESP of +2.70% and it currently flaunts a Zacks Rank #1.

Monster Beverage Corporation MNST currently has an Earnings ESP of +21.81% and a Zacks Rank #2.

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Newell Brands Inc. (NWL) : Free Stock Analysis Report
 
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Monster Beverage Corporation (MNST) : Free Stock Analysis Report
 
Corteva, Inc. (CTVA) : Free Stock Analysis Report
 
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