I have found the risk-reward for Archer-Daniels-Midland Co.
(NYSE:ADM) very attractive for some time now. In addition, the company also has
an incredibly long dividend growth streak and boasts a market-beating yield.
But after hitting an all-time high, is
Archer-Daniels-Midland still a buy today? Let's examine the company's recent
quarter and the stock valuation to determine that answer.
Earnings highlights
Archer-Daniels-Midland reported fourth-quarter and full-year
earnings results on Jan. 26. For the quarter, revenue grew 10.1% to $18
billion. This was $1.5 billion above Wall Street analysts' estimates. Adjusted
earnings per share declined 14.8% to $1.21, but was 12 cents better than
expected.
For the year, revenue fell 0.5% to $64.4 billion, while
adjusted earnings per share increased 10.8% to $3.59, a new record.
All reportable business segments demonstrated operating
profit growth in the fourth quarter.
Agricultural Services and Oilseeds grew nearly 13% to $1.1
billion. Ag Services remains strong, especially in North America, which
benefited from higher global demand, especially in China. Ag Services had
higher export volumes and an improvement in margins. South America was lower
year over year, but this is primarily due to advanced sales in the first half
of 2020 as countries accelerated orders as a result of the Covid-19 pandemic.
The Crushing business experienced a near triple in operating
profit as it benefited from higher demand for meal and vegetable oils. A lower
global supply of soybeans was also a tailwind. Margins were up in all regions.
Excluding a retroactive biodiesel tax credit in the fourth quarter of 2019,
profit for Refined Products was up year over year due to gains in South American
markets.
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