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Archer-Daniels Midland Plans to Sell Brazil Sugar Ethanol Plant

Gabriel Kane

Friday’s Consumer Pops and Drops: VFC, ADM, WRK, MDLZ, K, BERY

(Continued from Prior Part)

Price movement of Archer-Daniels Midland

Archer-Daniels Midland (ADM) has a market cap of $19.4 billion. ADM fell by 3.7% to close at $32.65 per share as of February 19, 2016. The price movements on weekly, monthly, and year-to-date (or YTD) bases were 3.2%, 5.3%, and -10.2%, respectively.

Technically, the stock has broken the support and is trading below all moving day averages. Currently, ADM is trading 1.8% below its 20-day moving average, 4.1% below its 50-day moving average, and 23.0% below its 200-day moving average.

The FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR) invests 3.4% of its holdings in ADM. The ETF tracks an index of companies that operate, manage, or produce natural resources in energy, gas, precious or industrial metals, timber, or water. The YTD price movement of GUNR is 0.36% as of February 18, 2016.

The Guggenheim S&P 500 Pure Value ETF (RPV) invests 1.9% of its holdings in ADM. The ETF tracks an index of primarily large-cap committee-selected US stocks. The index covers about 33% of the S&P 500’s market cap, using three factors to select value stocks.

The PowerShares Dynamic Large Cap Value ETF (PWV) invests 1.4% of its holdings in ADM. The ETF tracks the Dynamic Large Cap Value Intellidex Index. The index selects its holdings using a ten-factor style isolation process and uses a tiered weighting scheme.

The market caps of ADM’s competitors are as follows:

  • Bunge (BG) — $7.0 billion

  • Ingredion (INGR) — $7.3 billion

ADM plans to sell plants

ADM doesn’t expect to restart its sugar cane ethanol plant in Brazil after a seasonal shutdown. It’s also been trying to sell the Brazilian plant in Limeira do Oeste since 2012 and has been looking for possible options. Last month, it was evaluating options for three US corn ethanol dry mills, including a possible sale.

On a positive side, ADM has been ranked by Fortune magazine as the world’s most admired company in the food production industry.

Performance of ADM in fiscal 4Q15 and fiscal 2015

ADM reported 4Q15 revenues of $16,445.0 million, a fall of 21.3% compared to revenues of $20,894.0 million in fiscal 4Q14. Revenues from agricultural services, corn processing, oilseeds processing, and wild flavors and specialty ingredients fell by 22.1%, 20.2%, 22.4%, and 3.6%, respectively, in fiscal 4Q15 compared to fiscal 4Q14.

Its net income and EPS (earnings per share) rose to $718.0 million and $1.19, respectively, in fiscal 4Q15, compared to $701.0 million and $1.08, respectively, in fiscal 4Q14.

The company has declared a quarterly cash dividend of $0.30 per share on its common stock. This dividend is payable on March 8, 2016, to shareholders of record at the close of business on February 16, 2016.

Fiscal 2015 results

In fiscal 2015, ADM reported revenues of $67,702.0 million, a fall of 16.6% YoY (year-over-year). The processed volumes of oilseeds rose by 5.0%. Processed volumes of corn and milling and cocoa fell by 2.5% and 2.3%, respectively, in fiscal 2015.

The company’s net income and EPS fell to $1,849.0 million and $2.98, respectively, in fiscal 2015, compared to $2,248.0 million and $3.43, respectively, in fiscal 2014.

Meanwhile, its cash and cash equivalents and operating working capital fell by 17.2% and 9.0%, respectively, in fiscal 2015. Its long-term debt-to-equity ratio rose to 0.32 in fiscal 2015 compared to 0.28 in fiscal 2014.

The PE (price-to-earnings) and PBV (price-to-book value) ratios of ADM are 10.9x and 1.1x, respectively, as of February 19, 2016.

ADM has entered into an agreement to purchase a controlling stake in Harvest Innovations. This transaction will close in the coming months, subject to regulatory approval.

Continue to the next part for a look at WestRock.

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