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Archer-Daniels-Midland Company (ADM)
:ADM
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Archer Daniels Midland
(NYSE:ADM)60Neutral
Positive Factors
Cost Savings
ADM announced $200-300 million of cost savings in 2025 and $500-750 million of savings over the next 3-5 years, driven by improvements in manufacturing costs and targeted workforce reductions.
Positive Earnings Estimate
Estimates for ADM in 2025 have been raised, indicating positive future performance.
Negative Factors
Accounting Irregularities
Last year’s discovery of accounting irregularities, despite not having an impact on consolidated earnings, will continue to weigh on ADM’s multiple given the company’s muted accountability response.
Biodiesel Profit Impact
The new credit should cut well over $100mn/yr in biodiesel profits compared to pre-2024 levels.
Nutrition Segment Performance
Nutrition continues to underperform expectations, and while it’s tough to gauge the segment’s normalized profitability, this figure increasingly looks far below the levels achieved in 2021-22.
Archer Daniels Midland (ADM) vs. S&P 500 (SPY)
Market Cap
$21.98B
Dividend Yield4.39%
Average Volume (3M)4.10M
Price to Earnings (P/E)12.5
Beta (1Y)0.39
Revenue Growth-9.01%
EPS Growth-43.53%
CountryUS
Employees44,000
SectorIndustrials
Sector Strength66
IndustryConsumer Products - Foods
Share Statistics
EPS (TTM)3.61
Shares Outstanding479,707,060
10 Day Avg. Volume4,143,106
30 Day Avg. Volume4,096,677
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.26
Price to Cash Flow (P/CF)17.10
P/FCF Ratio11.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$50.14Price Target Upside9.48% Upside
Rating ConsensusModerate Sell
Number of Analyst Covering7
Archer Daniels Midland Business Overview & Revenue Model
Company DescriptionArcher Daniels Midland (ADM) is a global leader in nutrition and agricultural origination and processing. The company operates across various sectors, including food ingredients, animal nutrition, and biofuels. ADM's core products and services include the processing of oilseeds, corn, and wheat, and the production of ingredients like sweeteners, starches, and proteins, which are used in various food and beverage products worldwide.
How the Company Makes MoneyADM makes money through its diversified operations in the agricultural and food processing sectors. The company's revenue streams include the sale of processed agricultural commodities, such as oilseeds and corn, which are transformed into ingredients for food, animal feed, and industrial products. Additionally, ADM generates income from its biofuels segment, particularly in the production and sale of ethanol. The company benefits from strategic partnerships with farmers and other agribusinesses, ensuring a steady supply of raw materials and access to global markets. ADM also engages in trading operations, leveraging its extensive supply chain to optimize commodity sales and distribution, contributing significantly to its earnings.
Archer Daniels Midland Financial Statement Overview
Summary
Archer Daniels Midland exhibits a mixed financial position with moderate stability in its balance sheet and operational efficiency, although revenue and profitability have declined over recent years. Cash flow management presents challenges given the downward trend in free cash flow.Income Statement
The company has demonstrated fluctuating revenue trends, with revenue decreasing from $101.8 billion in 2022 to $85.5 billion in 2024. Gross profit margin and net profit margin have shown signs of contraction, reflecting operational challenges. However, the company maintains an EBIT margin of approximately 2.42% in 2024, indicating some level of operational efficiency.65
Positive
Balance Sheet
Archer Daniels Midland has a solid equity base with a debt-to-equity ratio of 0.46 in 2024, indicating moderate leverage. The return on equity has decreased over the years, falling to 8.12% in 2024, suggesting reduced profitability from equity investments. The equity ratio stands at 61.72% in 2024, showcasing a strong asset base funded by equity.72
Positive
Cash Flow
The cash flow shows a declining free cash flow trend, with free cash flow decreasing from $2.97 billion in 2023 to $1.22 billion in 2024. The operating cash flow to net income ratio of 1.54 indicates adequate cash generation relative to net income, but the declining cash flow is a concern.58
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 85.53B | 93.94B | 101.85B | 85.25B | 64.36B | Gross Profit |
| 5.78B | 7.51B | 7.57B | 5.99B | 4.45B | EBIT |
| 2.07B | 4.06B | 5.70B | 3.78B | 2.71B | EBITDA |
| 4.10B | 6.01B | 6.67B | 4.58B | 3.18B | Net Income Common Stockholders |
| 1.80B | 3.48B | 4.34B | 2.71B | 1.77B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 857.00M | 5.39B | 1.04B | 943.00M | 666.00M | Total Assets |
| 53.27B | 54.63B | 59.77B | 56.14B | 49.72B | Total Debt |
| 10.16B | 9.60B | 10.29B | 10.58B | 11.05B | Net Debt |
| 9.55B | 8.23B | 9.25B | 9.64B | 10.39B | Total Liabilities |
| 30.84B | 30.17B | 35.16B | 33.37B | 29.62B | Stockholders Equity |
| 22.17B | 24.13B | 24.28B | 22.48B | 20.00B |
| Cash Flow | Free Cash Flow | |||
| 1.22B | 2.97B | 2.16B | 5.43B | -3.21B | Operating Cash Flow |
| 2.78B | 4.46B | 3.48B | 6.59B | -2.39B | Investing Cash Flow |
| -2.70B | -1.50B | -1.40B | -2.67B | 4.46B | Financing Cash Flow |
| -1.53B | -4.60B | -2.50B | -1.12B | -423.00M |
Archer Daniels Midland Technical Analysis
Negative
45.80
Price Trends
48.53
Negative
50.88
Negative
55.08
Negative
Market Momentum
-0.61
Negative
40.62
Neutral
13.53
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ADM, the sentiment is Negative. The current price of 45.8 is below the 20-day moving average (MA) of 46.30, below the 50-day MA of 48.53, and below the 200-day MA of 55.08, indicating a bearish trend. The MACD of -0.61 indicates Negative momentum. The RSI at 40.62 is Neutral, neither overbought nor oversold. The STOCH value of 13.53 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ADM.
Archer Daniels Midland Risk Analysis
Archer Daniels Midland disclosed 17 risk factors in its most recent earnings report. Archer Daniels Midland reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Archer Daniels Midland Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $84.45B | 19.07 | 16.69% | 2.74% | 1.18% | -5.47% | |
73 Outperform | $28.43B | 21.22 | 38.65% | 2.74% | -16.16% | 41.01% | |
72 Outperform | $8.29B | 13.29 | 17.01% | 2.45% | -8.95% | 1.35% | |
66 Neutral | $12.16B | 24.89 | 5.53% | 5.50% | -2.00% | -50.02% | |
65 Neutral | $9.61B | 8.97 | 11.47% | 3.79% | -10.78% | -45.77% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% | |
60 Neutral | $21.98B | 12.55 | 7.78% | 4.39% | -9.01% | -43.53% |
* Industrials Sector Average
Performance Comparison
ADM
Archer Daniels Midland
45.80
-6.37
-12.21%
BG
Bunge Global
71.71
-17.38
-19.51%
CAG
Conagra Brands
25.39
-1.23
-4.62%
K
Kellanova
82.37
30.12
57.65%
INGR
Ingredion
129.21
15.77
13.90%
MDLZ
Mondelez International
66.30
-3.43
-4.92%
Archer Daniels Midland Earnings Call Summary
Earnings Call Date: Feb 4, 2025 | % Change Since: -7.42% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Neutral
ADM demonstrated strong financial performance and operational improvements, particularly in crushing volumes and safety records. However, they faced significant challenges with market conditions, policy uncertainties, and a struggling nutrition segment, leading to cost-cutting measures and workforce reductions.Highlights
Strong Financial Performance
ADM reported fourth quarter adjusted earnings per share of $1.14 and full-year adjusted earnings per share of $4.74, in line with the midpoint of guidance. Total segment operating profit was $1.1 billion for the fourth quarter and $4.2 billion for the full year.
Operational Improvements
Achieved strong crush volumes in canola and rapeseed, improved crush volumes in North America, and successfully ramped up run rates at the Spiritwood facility.
Starches & Sweeteners Success
Improved plant performance led to a 3% higher production volume year-over-year, setting operating profit records in several product lines in North America.
Safety and Innovation Achievements
Significantly improved safety record with a more than 35% reduction in process safety incidents and advanced key innovation initiatives in biosolutions and health & wellness.
Dividend Increase
Announced an increase in quarterly dividend, marking the 93rd consecutive year of uninterrupted dividends.
Lowlights
Market Challenges
Faced negative pressures from market conditions such as biofuel and trade policy uncertainty, leading to a 32% decline in the AS&O segment operating profit for the fourth quarter.
Nutrition Segment Struggles
Weaker consumer demand and unplanned downtime at Decatur East drove lower organic revenues, with operating profit down 50% for the first quarter of 2025 compared to the prior year.
Cost Reduction and Workforce Impact
Announced targeted action to reduce approximately 600 to 700 roles, including 150 unfilled positions, as part of a cost reduction effort expected to deliver $200 million to $300 million in 2025.
Policy and Trade Uncertainties
Navigating uncertainties in trade and regulatory policies affecting geographic supply and demand, with potential impacts from China tariffs and biofuels policy.
Company Guidance
During ADM's fourth-quarter earnings call for 2024, the company provided guidance for 2025, highlighting expectations and strategic focuses amid ongoing market challenges. ADM reported a full-year adjusted earnings per share of $4.74, with a total segment operating profit of $4.2 billion and a trailing four-quarter adjusted ROIC of 8.3%. The company aims to address operational challenges, particularly in North America, and expects cost management actions to deliver savings between $500 million and $750 million over the next three to five years, with $200 million to $300 million anticipated in 2025. They are focusing on strategic simplification with a pipeline of approximately $2 billion in portfolio opportunities. For 2025, ADM expects adjusted earnings per share between $4 and $4.75. Despite anticipated lower margins in some segments, they remain optimistic about margin improvements in the second half of the year, supported by policy clarity and strong fundamentals. ADM plans to continue investing in growth areas, maintaining a leverage ratio of about 2.0 times, and prioritizing the return of cash to shareholders through dividends and share repurchases.Archer Daniels Midland Corporate Events
Executive/Board Changes
Archer Daniels Midland Announces Leadership Changes in 2025
Neutral
Jan 29, 2025
On January 29, 2025, Archer Daniels Midland Company announced the appointment of Carrie Nichol as Vice President and Chief Accounting Officer, effective March 1, 2025. Nichol, with over 20 years of experience in finance and accounting, joins from Cargill and will succeed Molly Strader Fruit, who will transition to Vice President, Total Rewards and HR Operations. Nichol’s extensive background is expected to strengthen ADM’s finance organization and support its strategic priorities.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.