Is ADM’s Recent 19.2% Gain Justified by Its Cash Flow and Earnings Outlook?

• Wondering if Archer-Daniels-Midland is still a long term staple for your portfolio or if the recent run makes it look a bit rich? This breakdown will walk through what the current share price is really implying.
• The stock is up 4.8% over the last month and 17.5% year to date, yet it is still working its way back from a 3 year decline of 29.3%. That makes the current 19.2% 1 year gain especially interesting.
• Recent headlines have centered on ADM doubling down on its core agricultural supply chain and expanding higher margin nutrition and biofuels segments. This signals a strategic push to balance cyclical commodity exposure with more stable earnings drivers. At the same time, ongoing discussions about global food security and trade flows have kept investor attention on companies like ADM that sit at the heart of the grain and oilseed ecosystem.
• On our checks, ADM scores just 2/6 for valuation, suggesting it screens as undervalued on only a couple of metrics, but that is just the starting point. Next we will unpack what different valuation approaches say about the stock today, and then finish with a more holistic way to think about ADM's true worth.

Archer-Daniels-Midland scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Archer-Daniels-Midland Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow model estimates what a business is worth by projecting the cash it can generate in the future and discounting those cash flows back to today. For Archer-Daniels-Midland, the latest twelve month Free Cash Flow sits at about $4.7 billion, which forms the starting point for the 2 stage Free Cash Flow to Equity model used here.

Analysts have explicit forecasts through 2027, with Free Cash Flow expected to reach around $2.2 billion by then, and Simply Wall St extrapolates these estimates further out to 2035. By 2035, projected Free Cash Flow trends toward roughly $1.0 billion, reflecting a moderation from recent elevated cash generation as commodity conditions normalize and growth slows over time.

When all of these projected cash flows are discounted back, the model arrives at an intrinsic value of about $48.81 per share. Based on this DCF estimate, the stock screens as roughly 20.9% overvalued relative to its current price, which indicates that investors are already paying for a sizable portion of ADM’s future cash flow potential.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Archer-Daniels-Midland may be overvalued by 20.9%. Discover 906 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Archer-Daniels-Midland.

Approach 2: Archer-Daniels-Midland Price vs Earnings

For profitable, established companies like Archer-Daniels-Midland, the price to earnings ratio is a useful way to gauge what investors are willing to pay for each dollar of current earnings. It ties directly to the bottom line, which tends to be more stable and comparable across businesses than revenue alone.

A normal or fair PE ratio typically reflects how quickly earnings are expected to grow and how risky those earnings are. Faster growth and lower risk usually justify a higher multiple, while slower or more volatile earnings should trade on a discount. ADM currently trades on a PE of about 23.9x, which is slightly above the Food industry average of around 21.8x but a touch below the peer group average of roughly 25.0x.

Simply Wall St’s Fair Ratio for ADM comes in at about 23.9x, which is its proprietary estimate of the PE multiple ADM should trade on after accounting for factors like earnings growth, margins, industry, market cap, and company specific risks. This is more tailored than a simple peer or industry comparison, because it adjusts for ADM’s own profile rather than assuming all Food stocks deserve the same multiple. With the stock’s actual PE almost exactly in line with this Fair Ratio, the market appears to be pricing ADM quite sensibly today.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

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

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of Archer-Daniels-Midland's story with a concrete financial forecast and a clear fair value estimate.

A Narrative is your own structured storyline for the company, where you spell out how you think revenue, earnings, and margins will evolve, and those assumptions are then turned into projected financials and a fair value you can compare to today’s share price to decide whether ADM looks like a buy, a hold, or a sell.

Narratives on Simply Wall St, available to millions of investors on the Community page, are easy to use and are updated dynamically as new data, earnings, or news arrive, so your story and valuation stay in sync with reality instead of going stale.

For example, one ADM Narrative might assume policy support for biofuels and margin expansion justify a fair value close to the high end of recent targets around $70. Another more cautious Narrative might focus on demand headwinds and margin pressure and land nearer the low end around $54. The difference between those fair values and the current price gives each investor a clear, personalized signal on how to interpret the stock.

Do you think there's more to the story for Archer-Daniels-Midland? Head over to our Community to see what others are saying!

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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