As you might know, Archer-Daniels-Midland Company (NYSE:ADM) recently reported its full-year numbers. Archer-Daniels-Midland reported US$65b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$2.44 beat expectations, being 4.5% higher than what analysts expected. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether analysts have changed their earnings models, following these results.
Taking into account the latest results, the latest consensus from Archer-Daniels-Midland's ten analysts is for revenues of US$66.9b in 2020, which would reflect a credible 3.5% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to bounce 29% to US$3.14. Before this earnings report, analysts had been forecasting revenues of US$66.8b and earnings per share (EPS) of US$3.29 in 2020. Analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share forecasts for next year.
The consensus price target held steady at US$47.75, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Archer-Daniels-Midland, with the most bullish analyst valuing it at US$52.00 and the most bearish at US$38.00 per share. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. One thing stands out from these estimates, which is that analysts are forecasting Archer-Daniels-Midland to grow faster in the future than it has in the past, with revenues expected to grow 3.5%. If achieved, this would be a much better result than the 3.6% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 2.9% per year. So while Archer-Daniels-Midland's revenues are expected to improve, it seems that analysts are expecting it to grow at about the same rate as the overall market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Archer-Daniels-Midland analysts - going out to 2023, and you can see them free on our platform here.
It might also be worth considering whether Archer-Daniels-Midland's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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