Does ADM’s 24% Rally Reflect Real Value Amid Global Crop Supply Uncertainty?

If you have Archer-Daniels-Midland stock on your radar or already in your portfolio, you have probably been keeping a close watch on its steady climb over recent months. This is the kind of stock that invites debate. Do you ride out the recent gains or lock in profits while you can? In the past 90 days alone, ADM has surged over 24%, and the 30-day return clocks in at a robust 10%. Even one-year returns, up about 6.6%, make the case that momentum is not just a short-term story. However, it is not all upward. If you zoom out to three-year performance, you will see a loss of 25%, a stark contrast to the impressive 55% gain for investors willing to hold on over five years.

Recent price action is partially fueled by shifts in global commodity markets and changing expectations around food supply chains. As a major player in agricultural processing, ADM’s fortunes ebb and flow with everything from crop yields to global trade policy. These factors drive both optimism and caution, which is why the stock sometimes reacts so swiftly to subtle headlines. It is no wonder that valuation has become the talking point, especially as the current price trades just above the latest analyst target.

Now, here is where things get especially interesting. When we run ADM through six standard valuation checks—those classic metrics every investor loves to debate—it does not pass a single one. That is right, out of six, ADM is undervalued in zero checks, earning a value score of zero. But is that really the whole story? Let us walk through these traditional valuation methods and see what they reveal about ADM’s current price. And do not worry, we will dig into an even better way to judge the company’s true value before we are done.

Archer-Daniels-Midland delivered 6.6% returns over the last year. See how this stacks up to the rest of the Food industry.

Approach 1: Archer-Daniels-Midland Cash Flows

The Discounted Cash Flow (DCF) model is a classic approach to valuation. It aims to estimate the intrinsic worth of a company based on its expected future cash flows, which are projected out and then discounted back to today’s value. For Archer-Daniels-Midland, the model uses the latest twelve months’ Free Cash Flow, which is $4.2 billion. Analysts expect the company’s annual Free Cash Flow to shrink significantly in the near term, with projections showing $647 million in 2026 and a gradual recovery to around $281.9 million by 2035.

Based on these projections, the DCF model estimates ADM’s intrinsic value at $13.94 per share. However, when compared to the current market price, this valuation signals that ADM is trading at a steep premium. The intrinsic discount stands at -330.2%, which means the stock is 330.2% overvalued by this metric and does not provide a comfortable margin of safety for value-oriented investors.

Result: OVERVALUED

Our DCF analysis suggests Archer-Daniels-Midland may be overvalued by 330.2%. Find undervalued stocks based on DCF analysis or create your own screener to find better value opportunities.

Approach 2: Archer-Daniels-Midland Price vs Earnings

For companies that reliably generate profits, the price-to-earnings (PE) ratio is often viewed as the gold standard for valuation. It gives investors a sense of how much they are paying for each dollar of a company’s earnings, making it easy to compare across peers and industries. Growth expectations and risk play a large part in what constitutes a “normal” or fair PE. Companies with fast-growing earnings or rock-solid financials usually command higher multiples. In contrast, riskier or slower-growing firms tend to see their averages fall.

Currently, Archer-Daniels-Midland is trading at a PE ratio of 26.2x. When compared to the Food industry average of 20.9x and a peer average of 20.4x, ADM does appear to come at a bit of a premium. However, Simply Wall St’s proprietary Fair Ratio, which factors in company-specific traits like growth, profitability and risk profile, sets the fair PE for ADM at 23.9x.

The difference between the actual PE and the Fair Ratio is only 2.3 points, suggesting ADM’s valuation is not far from expectations set by its fundamentals. While it trades slightly above fair value, this is well within what investors might accept for a company with ADM’s profile.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Archer-Daniels-Midland Narrative

Instead of relying only on numbers, Narratives let you frame your investment decisions with a story—your perspective on where you think a company like Archer-Daniels-Midland is headed and why. A Narrative weaves together everything you know about the business, from global biofuel policies and production upgrades to future earnings and margins. It connects those ideas directly to a financial forecast and fair value estimate.

This approach makes investing clearer and more personal. Within Simply Wall St’s community, building and following Narratives is straightforward and accessible for every investor. After you create or choose a Narrative, you can quickly compare Fair Value to the current Price. This helps you decide whether now is the right time to buy or sell, based on your own story, not just generic metrics. Because Narratives are updated whenever new information such as news or earnings arrives, your investment outlook always reflects the latest data.

For example, some investors see ADM’s value as high as $70 per share, focusing on long-term benefits from facility upgrades and government support. Others set it at $48, expecting continued regulatory and market headwinds. Narratives help you invest with conviction by connecting your outlook, even if it differs from the crowd, to actionable financial insights.

Do you think there's more to the story for Archer-Daniels-Midland? Create your own Narrative to let the Community know!

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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