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Monsanto Touches a New 52-Week High

Zacks Equity Research

Shares of Monsanto Company (MON), an agricultural chemicals manufacturer, reached a new 52-week high of $120.25 during its trading session on May 23. This marks a nominal increase from the previous high of $119.53 hit a day ago.

Monsanto closed the day at $119.92 on May 23, reflecting a solid return of 16.2% in the past one year. The trading volume for the session was 2,169.5K shares. An expected earnings growth rate of 13.3% over the next five years indicates the company’s potential for further accretion.

Growth Drivers

Monsanto posted impressive results for the second quarter of fiscal 2014 (ended Feb 28, 2014). Earnings came in at $3.15 per share, up roughly 15% from the year-ago quarter. Shares have risen 5.6% after the results were announced before the opening bell on Apr 2.

In the reported quarter, revenues grew around 6.6% year over year to $5.8 billion driven by healthy performance in both the segments. While Seeds and Genomics went up 7.0% year over year to $4.6 billion, Agricultural Productivity increased 5.2% year over year to $1.2 billion. Also, Monsanto recorded a boost in the corn and soy business which is likely to persist in the coming quarters, thus leading to a further hike in the revenues.

Monsanto is optimistic about results in the quarters ahead, based on its organic as well as inorganic growth. The company is expected to prosper, given the increased sales of corn and soybeans. Earnings per share are expected in the range of $5.00 to $5.20. On an as-reported basis, the company hopes to earn $5.02 to $5.22 per share.  However, the company also foresees headwinds of 15 to 20 cents from foreign currency impacts.

The impressive quarter results combined with an average earnings surprise of +0.69% encourages us regarding the company’s future outlook. The Zacks Consensus Estimate for Monsanto is pegged at $5.24 for fiscal 2014 and at $6.01 for fiscal 2015, reflecting year-over-year growth of 15.0% and 14.6%, respectively.

Other Stocks to Consider

With a Zacks Rank #3 (Hold), Monsanto currently has a market capitalization of $62.9 billion. Some stocks worth considering in the industry include Yara International ASA (YARIY), Syngenta AG (SYT) and Wilmar International Ltd. (WLMIY). While Yara International sports a Zacks Rank #1 (Strong Buy), both Syngenta and Wilmar International carry a Zacks Rank #2 (Buy).

Read the Full Research Report on MON
Read the Full Research Report on SYT
Read the Full Research Report on YARIY
Read the Full Research Report on WLMIY

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