Should You Think About Buying Archer-Daniels-Midland Company (NYSE:ADM) Now?

Let's talk about the popular Archer-Daniels-Midland Company (NYSE:ADM). The company's shares saw significant share price movement during recent months on the NYSE, rising to highs of US$82.55 and falling to the lows of US$70.55. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Archer-Daniels-Midland's current trading price of US$73.36 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Archer-Daniels-Midland’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Archer-Daniels-Midland

Is Archer-Daniels-Midland Still Cheap?

According to my valuation model, Archer-Daniels-Midland seems to be fairly priced at around 5.0% below my intrinsic value, which means if you buy Archer-Daniels-Midland today, you’d be paying a fair price for it. And if you believe that the stock is really worth $77.21, then there’s not much of an upside to gain from mispricing. What's more, Archer-Daniels-Midland’s share price may be more stable over time (relative to the market), as indicated by its low beta.

What does the future of Archer-Daniels-Midland look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Archer-Daniels-Midland, at least in the near future.

What This Means For You

Are you a shareholder? ADM seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on ADM for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on ADM should the price fluctuate below its true value.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. While conducting our analysis, we found that Archer-Daniels-Midland has 1 warning sign and it would be unwise to ignore it.

If you are no longer interested in Archer-Daniels-Midland, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.