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How Archer-Daniels (ADM) Looks Just Ahead of Q3 Earnings

Zacks Equity Research

Archer-Daniels-Midland Company ADM is scheduled to report third-quarter 2019 numbers on Oct 31, before the opening bell. We note that in the trailing four quarters, the company’s bottom line has underperformed the Zacks Consensus Estimate, recording average positive earnings surprise of 4.2%. In the last reported quarter, the company delivered a negative earnings surprise of 1.6%.

What to Expect This Time

The Zacks Consensus Estimate for third-quarter earnings has moved south by 2 cents over the past seven days to 67 cents, suggesting a decline of 27.2% from the year-ago quarter’s reported figure.

For revenues, the consensus mark is pegged at $16,026 million, indicating an increase of 1.4% from the figure reported in the year-ago quarter.

Archer Daniels Midland Company Price, Consensus and EPS Surprise

Archer Daniels Midland Company Price, Consensus and EPS Surprise

Archer Daniels Midland Company price-consensus-eps-surprise-chart | Archer Daniels Midland Company Quote

Factors at Play

Archer Daniels’ three strategic pillars — optimize the core, drive efficiency and grow strategically — as well as focus on cost savings and Project Readiness are likely to get reflected in third-quarter results. Notably, Nutrition segment is likely to have contributed to the company’s operating profit. In the last earnings call, management guided substantial growth in the segment operating profit for the third quarter.

However, the company has been witnessing softness across its Carbohydrate Solutions segment, a trend which is most likely to have continued in the to-be-reported quarter. In second-quarter 2019, the segment’s revenues fell 7.8% year over year due to adverse weather in North America that impacted results in Starches and Sweeteners as well as Bio-products. Further, the segment’s adjusted operating profit slid 22.3%. Management expects decrease in revenues from Carbohydrate Solutions segment for the third quarter.

Zacks Model

Our proven model doesn’t conclusively predict an earnings beat for Archer-Daniels this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Archer-Daniels carries a Zacks Rank #4 (Sell) and Earnings ESP of -5.26%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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e.l.f. Beauty, Inc. ELF has an Earnings ESP of +10.71% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Newell Brands Inc. NWL has an Earnings ESP of +6.73% and a Zacks Rank #2.

Molson Coors Brewing Company TAP has an Earnings ESP of +4.56% and a Zacks Rank #3.

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