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Archer Daniels Closed at 52-Week High

Zacks Equity Research

Archer Daniels Midland Company’s (ADM) shares reached a new 52-week high of $34.34 on Tuesday, May 7. Closing at its 52-week high mark, the world’s leading food processing company gained about 1.4% from the previous day’s session, and generated a year-to-date return of approximately 20.5%.

This Zacks Rank #3 (Hold) company currently trades at a forward P/E of 14.26x, a 2.8% premium to the peer group average of 13.87x. The average volume of shares traded over the last 3 months is approximately 4,750K.

We believe that Archer Daniels’ consistent focus on enhancing its processing capabilities and global footprints through strategic acquisitions and joint ventures (:JV) are the major forces that drove the company’s shares to the new high.

Recently, Archer Daniels completed the due diligence for its proposed acquisition of GrainCorp Limited. In accordance with the takeover implementation deed entered last week, the company now proposes to pay A$12.20 per share in cash for all outstanding shares of GrainCorp, with the aggregate transaction value amounting to A$3.4 billion.

Archer Daniels’ interest in acquiring GrainCorp is in sync with its ongoing portfolio management initiative. The company’s strategy focuses on expanding its Agricultural Services and Oilseeds businesses across the globe by investing in key supply areas beyond national borders.

Apart from making way for the company’s strategy of solidifying its global footprint in the key agricultural regions, the buyout is expected to help Archer Daniels to fortify its financial position.

Simultaneously, companies such as Nordstrom Inc. (JWN), V.F. Corp. (VFC) and Whirlpool Corp. (WHR) achieved new 52-week highs of $58.66, $180.01 and $122.65, respectively, on Tuesday, May 7.

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