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Monsanto Returns Value to Holders

Zacks Equity Research

Recently, Monsanto Company’s (MON) Board of Directors approved a new three-year share repurchase program and declared a quarterly dividend. The company, with a strong cash position has remained committed to return value to shareowners over time. This is proved once again with the board’s authorization toward fair distribution of the company’s resources.

With regard to the new share repurchase program, effective July 1, 2012, Monsanto's board authorized up to $1 billion of the company's common stock over a three-year period. The new program has been scheduled to start at the completion of Monsanto's existing $1 billion share repurchase program, which commenced in July 2010.

On the same day, the Board of Directors also declared a quarterly dividend of 30 cents per share on the company's common stock. The dividend is payable on July 27, 2012 to shareowners of record as of July 6, 2012 and relates to the company's third quarter of 2012.

During the second quarter of fiscal 2012, Monsanto posted strong financial results with earnings per share from ongoing business of $2.28 ($2.24 on an as-reported basis) and revenues of $4,748 million. The results were based on upside in sales volume and a mix benefit across segments.

Considering a continued increase in production backed by its cost-effective business improvement, Monsanto Company raised its fiscal 2012 earnings per share guidance a week ago. The new guidance was in the range of $3.65 to $3.70 on an ongoing basis and $3.73 to $3.78 on an as-reported basis compared with its former full-year earnings per share guidance level of $3.49 to $3.54 on an ongoing basis and $3.45 to $3.50 on an as-reported basis.

We believe positive sales movement, increased acreage across Latin America, solid price/mix and adoption of newer traits will continue to upsize revenue in the upcoming quarters. Monsanto will continue to deliver industry-leading growth leveraging on improved margins -- an edge over its peers, such as Syngenta AG (SYT).

We are currently maintaining a long-term Neutral recommendation on the stock.  Monsanto has a Zacks #2 Rank, which translates into a short-term Buy rating (1-3 months).

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