Adecoagro SA (AGRO) AI Stock Analysis

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Adecoagro SA

(NYSE:AGRO)

71Outperform

Adecoagro SA's overall score reflects its solid market valuation and favorable technical indicators, which are slightly offset by mixed financial performance and moderate challenges highlighted in the earnings call. The company benefits from strong revenue and strategic investments in key segments, but it faces profitability pressures and uncertainties in its operational environment. The valuation metrics suggest the stock is attractively priced, offering potential upside for investors.

Positive Factors

Acquisition

Tether's tender offer to acquire Adecoagro shares includes a 9% premium to the current stock price.

Financial Performance

Fourth quarter adjusted EBITDA rose by 20.4% year-over-year, surpassing expectations, partly due to non-recurring tax gains.

Management Stability

Tether's intention to maintain the main executives and the company’s business structure reduces the risk of disruptive changes in the company.

Negative Factors

Commodity Prices

Challenging results on the back of drier weather affecting yields, lower sugar prices and ethanol price recovery taking longer than expected.

Future Pricing

Sugar hedges for 2025 are below last year's rates, indicating less favorable future pricing.

Market Liquidity

Liquidity likely reduced as the free float will go to 30%.

Adecoagro SA (AGRO) vs. S&P 500 (SPY)

Market Cap

$1.08B

Dividend Yield3.27%

Average Volume (3M)1.06M

Price to Earnings (P/E)12.0

Beta (1Y)0.20

Revenue Growth18.45%

EPS Growth-57.55%

CountryUS

Employees8,896

SectorConsumer Defensive

Sector Strength86

IndustryAgricultural Farm Products

Share Statistics

EPS (TTM)0.90

Shares Outstanding100,053,780

10 Day Avg. Volume1,738,315

30 Day Avg. Volume1,059,244

Financial Highlights & Ratios

PEG Ratio0.70

Price to Book (P/B)N/A

Price to Sales (P/S)4.27

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$11.83

Price Target Upside9.33% Upside

Rating ConsensusHold

Number of Analyst Covering3

Adecoagro SA Business Overview & Revenue Model

Company DescriptionAdecoagro S.A. operates as an agro-industrial company in South America. It engages in farming crops and other agricultural products, dairy operations, and land transformation activities, as well as sugar, ethanol, and energy production activities. The company is involved in the planting, harvesting, and sale of grains and oilseeds, as well as wheat, corn, soybeans, peanuts, cotton, sunflowers, and others; provision of grain warehousing/conditioning, handling, and drying services to third parties; and purchase and sale of crops produced by third parties. It also plants, harvests, processes, and markets rice; and produces and sells raw milk, UHT, cheese, powder milk, and others. In addition, the company engages in the cultivating, processing, and transforming of sugarcane into ethanol and sugar; and the sale of electricity cogenerated at its sugar and ethanol mills to the grid. Further, it is involved in the identification and acquisition of underdeveloped and undermanaged farmland, and the realization of value through the strategic disposition of assets. As of December 31, 2021, the company owned a total of 219,850 hectares of land, including 18 farms in Argentina, 8 farms in Brazil, and 1 farm in Uruguay, as well as a total of 241 megawatts of installed cogeneration capacity. Adecoagro S.A. was founded in 2002 and is based in Luxembourg, Luxembourg.

How the Company Makes MoneyAdecoagro SA generates revenue through several key streams. Its primary sources of income include the cultivation and sale of agricultural commodities such as soybeans, corn, wheat, and rice. Additionally, the company has substantial operations in sugar and ethanol production, where it processes sugarcane into sugar and biofuels, capitalizing on the growing demand for renewable energy sources. The dairy business contributes by producing and selling milk and related products. Furthermore, Adecoagro benefits from its energy segment, which involves the generation and sale of electricity, primarily from biomass sources, enhancing its revenue through sustainable energy solutions. Strategic partnerships and a focus on operational efficiency across its diversified portfolio play significant roles in driving the company’s profitability.

Adecoagro SA Financial Statement Overview

Summary

Adecoagro SA's financial performance presents a mixed picture. While revenue growth is strong, declines in profit margins and return on equity raise concerns about profitability and efficiency. The balance sheet is relatively stable with moderate leverage, but cash flow challenges, particularly in free cash flow, highlight potential liquidity issues. The company needs to focus on improving cost efficiency and cash generation to bolster overall financial health.

Income Statement

Positive

Adecoagro SA shows a mixed performance in its income statement. The gross profit margin for 2024 was 23.8%, down from 32% in 2023, indicating a reduction in cost efficiency. The net profit margin decreased to 6.1% from 17.4%, reflecting a significant drop in bottom-line profitability. However, revenue grew by 16.9% from 2023 to 2024, showing positive sales momentum. The EBIT and EBITDA margins were 12% and 28% respectively, both experiencing declines, suggesting pressure on operating profitability.

Balance Sheet

Positive

The balance sheet reflects a stable yet leveraged structure. The debt-to-equity ratio for 2024 stood at 0.82, indicating a moderate level of financial leverage. Return on equity decreased to 6.7% from 18.4%, which may concern investors. However, the equity ratio improved to 43.9% in 2024, showing strengthened equity financing.

Cash Flow

Neutral

Adecoagro's cash flow statement reveals some challenges. The free cash flow decreased significantly by 65.4% from 2023 to 2024, indicating reduced cash generation after capital expenditures. The operating cash flow to net income ratio was robust at 3.56, suggesting strong cash generation relative to net income. However, the free cash flow to net income ratio is just 0.72, reflecting weaker cash retention after investments.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.52B	1.30B	1.35B	1.12B	817.76M
	Gross Profit
361.51M	415.39M	465.63M	484.25M	335.55M
	EBIT
182.30M	241.56M	249.80M	278.02M	189.05M
	EBITDA
426.38M	561.06M	397.65M	453.24M	245.45M
	Net Income Common Stockholders
92.34M	226.29M	108.14M	130.67M	1.07M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
211.24M	339.78M	230.65M	199.77M	336.28M
	Total Assets
3.11B	3.16B	3.11B	2.58B	2.48B
	Total Debt
1.12B	1.28B	1.35B	1.06B	1.17B
	Net Debt
910.34M	943.68M	1.12B	864.74M	830.58M
	Total Liabilities
1.71B	1.90B	1.95B	1.53B	1.52B
	Stockholders Equity
1.37B	1.23B	1.13B	1.01B	925.04M
Cash Flow		Free Cash Flow
66.19M	191.48M	139.80M	135.66M	80.14M
	Operating Cash Flow
328.33M	434.91M	370.03M	348.66M	257.13M
	Investing Cash Flow
-231.56M	-173.67M	-299.26M	-175.22M	-121.92M
	Financing Cash Flow
-274.00M	-208.74M	-23.57M	-303.13M	-53.92M

Adecoagro SA Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price10.82

Price Trends

50DMA

10.57

Positive

100DMA

10.39

Positive

200DMA

10.46

Positive

Market Momentum

MACD

0.23

Negative

RSI

65.61

Neutral

STOCH

57.97

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AGRO, the sentiment is Neutral. The current price of 10.82 is below the 20-day moving average (MA) of 10.98, above the 50-day MA of 10.57, and above the 200-day MA of 10.46, indicating a neutral trend. The MACD of 0.23 indicates Negative momentum. The RSI at 65.61 is Neutral, neither overbought nor oversold. The STOCH value of 57.97 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for AGRO.

Adecoagro SA Risk Analysis

Adecoagro SA disclosed 73 risk factors in its most recent earnings report. Adecoagro SA reported the most risks in the “Macro & Political” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Adecoagro SA Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CALM	76 Outperform	$4.54B	4.57	48.27%	4.73%	60.00%	259.01%
TSN	75 Outperform	$20.33B	19.26	5.74%	3.43%	1.27%	―
AGRO	71 Outperform	$1.08B	12.02	7.11%	3.27%	18.45%	-57.55%
BG	69 Neutral	$9.62B	8.99	10.95%	3.91%	-10.78%	-45.77%
Sector *	62 Neutral	$20.34B	13.97	-16.14%	3.32%	1.30%	5.01%
ADM	60 Neutral	$20.64B	11.77	7.78%	4.68%	-9.01%	-43.53%
CRESY	53 Neutral	$757.17M	―	-8.05%	10.04%	-3.06%	-124.82%

* Consumer Defensive Sector Average

Performance Comparison

AGRO

Adecoagro SA

10.82

-0.51

-4.50%

ADM

Archer Daniels Midland

44.38

-17.18

-27.91%

Bunge Global

74.29

-30.08

-28.82%

CALM

Cal-Maine Foods

92.58

34.26

58.74%

CRESY

Cresud Sociedad

10.11

1.36

15.54%

TSN

Tyson Foods

59.76

3.44

6.11%

Adecoagro SA Earnings Call Summary

Earnings Call Date: Mar 13, 2025 | % Change Since: 0.93% | Next Earnings Date: May 12, 2025

Earnings Call Sentiment Neutral

The earnings call revealed strong operational performance in key segments like sugar, rice, and dairy, supported by effective cost management and strategic investments. However, challenges such as the decline in sugar prices and weather impacts on sugarcane yields posed significant obstacles. The positive outlook for ethanol and increased shareholder returns provided a balanced view against the revenue decline and ongoing uncertainties with the Tether proposal.

Highlights

Record-Breaking Sugar Production

Achieved a new crushing record and a record in total sugar produced with a sugar mix of 52.2% and 832,000 tons.

Strong Performance in Rice and Dairy

Rice and dairy operations reported record results with significant recovery in yields and higher selling prices.

Increased Shareholder Distribution

Distributed $102 million in 2024, which is $32 million more than the distribution policy, without compromising debt or growth projects.

Positive Ethanol Market Outlook

Strong demand for ethanol due to low parity at the pump versus gasoline, leading to a favorable price scenario.

Improvement in Cash Cost

Cash costs amounted to 12.7 cents per pound of sugar equivalent, 8% lower than the prior year.

Lowlights

Quarterly Revenue Decline

Gross sales totaled $368 million during the fourth quarter, a quarterly drop despite a 2% annual increase.

Impact of Weather on Sugarcane Yields

The dry weather in 2024 led to reduced yields although the company managed to maintain production levels.

Decline in Sugar Prices

Global sugar prices decreased from record levels in 2023, impacting revenues despite high production.

Challenges in Crop Segment

Adjusted EBITDA for the crops segment was negative $3 million for the fourth quarter due to lower international prices and higher costs.

Uncertainty Over Tether Proposal

Ongoing discussions with Tether Investments to acquire a majority stake, adding uncertainty to the company's future.

Company Guidance

During Adecoagro's Fourth Quarter 2024 Results Conference Call, several key metrics and guidance were discussed. The company reported a consolidated adjusted EBITDA of $103 million for the quarter and $444 million for the year, reflecting an 8% year-over-year increase. Gross sales for the fourth quarter totaled $368 million, with annual revenues reaching nearly $1.5 billion, a 2% increase from the previous year. Despite a challenging year for crop operations due to uneven weather conditions, the company achieved record results in its rice and dairy segments, as well as operational records in sugar, ethanol, and energy production. A significant highlight was the increase in sugar production, with a sugar mix of 52.2% leading to a production of 832,000 tons. The company also mentioned its strategy to sell 31% of its 2024 ethanol production and the continued investment in cane expansion and biomethane production. Additionally, Adecoagro distributed $102 million in 2024 between dividends and share buybacks, surpassing its distribution policy by $32 million. For 2025, they plan to distribute at least $64 million based on $161 million in net cash from operations. Finally, the company's net debt stood at $522 million, with a net leverage ratio of 1.2 times, and they invested $104 million in expansion projects throughout the year.

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.