Archer-Daniels-Midland (ADM): Has the Recent Rebound Left the Stock Slightly Overvalued?

Archer-Daniels-Midland (ADM) has quietly outperformed much of the market this year, with the stock up about 16% year to date and roughly 20% over the past year despite modest revenue growth.

See our latest analysis for Archer-Daniels-Midland.

That move reflects investors slowly warming back up to ADM after a tough stretch, with a near 20% one year total shareholder return contrasting sharply with its negative three year total shareholder return.

If ADM’s steady rebound has you thinking about where else capital is rotating, it could be worth scanning fast growing stocks with high insider ownership for other under the radar opportunities with conviction from insiders.

With shares up strongly despite sluggish sales and trading slightly above analyst targets, investors face a key question: Is ADM still a value play with upside, or has the market already priced in its next leg of growth?

Most Popular Narrative: 1% Overvalued

With Archer-Daniels-Midland closing at $58.24 against a narrative fair value of $57.60, expectations for steady but unspectacular upside are finely balanced.

The analysts have a consensus price target of $58.3 for Archer-Daniels-Midland based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $70.0, and the most bearish reporting a price target of just $54.0.

Read the complete narrative.

Want to see what kind of slow burn revenue growth, margin rebuild, and future earnings multiple are needed to keep this valuation in balance? The full narrative spells it out.

Result: Fair Value of $57.60 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, lingering biofuel policy uncertainty and structurally weaker Carbohydrate Solutions demand could undermine margin rebuild efforts and derail the current fair value narrative.

Find out about the key risks to this Archer-Daniels-Midland narrative.

Another Way to Look at Value

Step back from the narrative of fair value and ADM’s 23.5x price-to-earnings ratio stands out against the US Food industry at 19.9x and a fair ratio of 23.8x. The gap is small but it suggests limited mispricing and raises the question: how much multiple upside is really left?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Archer-Daniels-Midland Narrative

If you see the story differently and want to stress test your own assumptions using the same toolkit, you can build a custom view in minutes: Do it your way.

A great starting point for your Archer-Daniels-Midland research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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