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ADM Outshines Q1 Estimates
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ADM Outshines Q1 Estimates

Archer-Daniels-Midland Company (ADM) has delivered strong first-quarter results as both revenue and earnings exceeded analysts’ expectations. The multinational food processing company engages in the procurement, transportation, storage, processing and selling of agricultural commodities, products and ingredients.

Adjusted earnings per share (EPS) of $1.90 stood above the Street’s estimate of $1.40 per share. The company had reported earnings of $1.39 in the same quarter last year. Meanwhile, revenues in the quarter climbed 25.2% year-over-year to $23.7 billion, surpassing expectations of $20.6 billion.

Segment-wise, net sales of Ag Services and Oilseeds increased 21.6% on the back of strong demand for Ag Services, vegetable oil and higher equity earnings from Wilmar. Nutrition unit’s sales jumped 23.1% year-over-year and Carbohydrate Solutions grew 51.4%.

Outlook

The Chairman and CEO of ADM, Juan Luciano, expects to witness a decline in crop supplies due to “weak Canadian canola crop, the short South American crops, and the disruptions in the Black Sea region.” This is likely to keep the global grain markets tight for the next few years.

“Longer term, markets continue to reflect the importance of the enduring global trends that are fueling performance across our portfolio by driving demand for our products. And within ADM, our productivity and innovation efforts are continuing to help us deliver on the evolving needs of our customers. Considering these factors, we expect 2022 results to exceed 2021’s,” Luciano added.

Stock Rating

The Street is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on three Buys and three Holds. ADM’s average price target of $93.25 implies 2.9% upside potential from current levels. Shares have gained 34.2% so far this year.

Crowd Wisdom

TipRanks’ Stock Investors tool shows that retail investors currently have a Very Positive stance on ADM, as 24% of investors on TipRanks increased their exposure to Archer-Daniels-Midland stock over the past 30 days.

Conclusion

Despite unfavorable supply environment and other headwinds, ADM has been able to deliver strong first-quarter results. Further, the bullishness of bloggers and news writers on the stock is another positive factor for the company.  

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