Since Archer-Daniels-Midland Company (NYSE:ADM) released its earnings in March 2019, analyst consensus outlook appear cautiously optimistic, as a 9.1% increase in profits is expected in the upcoming year, compared with the past 5-year average growth rate of -2.3%. By 2020, we can expect Archer-Daniels-Midland’s bottom line to reach US$2.0b, a jump from the current trailing-twelve-month of US$1.8b. Below is a brief commentary around Archer-Daniels-Midland’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
What can we expect from Archer-Daniels-Midland in the longer term?
The longer term expectations from the 11 analysts of ADM is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 1.5% based on the most recent earnings level of US$1.8b to the final forecast of US$2.0b by 2022. This leads to an EPS of $3.72 in the final year of projections relative to the current EPS of $3.21. By the end of 2022, analysts are expecting earnings to outpace revenue, and margins to expand from the current 2.8% to 2.9%.
Future outlook is only one aspect when you’re building an investment case for a stock. For Archer-Daniels-Midland, there are three pertinent factors you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Archer-Daniels-Midland worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Archer-Daniels-Midland is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Archer-Daniels-Midland? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.