NYSE:ADM

Stock Analysis Report

Executive Summary

Archer-Daniels-Midland Company procures, transports, stores, processes, and merchandises agricultural commodities, products, and ingredients in the United States and internationally.

Rewards

Trading at 37% below its fair value

Earnings are forecast to grow 17.51% per year

Pays a high and reliable dividend of 4.03%

Risk Analysis

Debt is not well covered by operating cash flow

High level of non-cash earnings

Highly volatile share price over past 3 months

Significant insider selling over the past 3 months



Snowflake Analysis

Undervalued established dividend payer.


Similar Companies

Share Price & News

How has Archer-Daniels-Midland's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: ADM's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

1.6%

ADM

1.8%

US Food

-2.6%

US Market


1 Year Return

-16.5%

ADM

-3.8%

US Food

-13.3%

US Market

Return vs Industry: ADM underperformed the US Food industry which returned -4% over the past year.

Return vs Market: ADM matched the US Market which returned -15.9% over the past year.


Shareholder returns

ADMIndustryMarket
7 Day1.6%1.8%-2.6%
30 Day-5.0%-6.1%-15.2%
90 Day-19.9%-12.0%-22.2%
1 Year-13.6%-16.5%-1.3%-3.8%-11.5%-13.3%
3 Year-11.7%-19.8%-10.2%-17.5%13.2%5.7%
5 Year-13.3%-25.6%24.6%9.9%31.8%17.2%

Price Volatility Vs. Market

How volatile is Archer-Daniels-Midland's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Archer-Daniels-Midland undervalued compared to its fair value and its price relative to the market?

37.0%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: ADM ($35.74) is trading below our estimate of fair value ($56.74)

Significantly Below Fair Value: ADM is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: ADM is good value based on its PE Ratio (14.6x) compared to the Food industry average (19.7x).

PE vs Market: ADM is poor value based on its PE Ratio (14.6x) compared to the US market (12.2x).


Price to Earnings Growth Ratio

PEG Ratio: ADM is good value based on its PEG Ratio (0.8x)


Price to Book Ratio

PB vs Industry: ADM is good value based on its PB Ratio (1x) compared to the US Food industry average (1.7x).


Next Steps

Future Growth

How is Archer-Daniels-Midland forecast to perform in the next 1 to 3 years based on estimates from 9 analysts?

17.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ADM's forecast earnings growth (17.5% per year) is above the savings rate (1.7%).

Earnings vs Market: ADM's earnings (17.5% per year) are forecast to grow faster than the US market (13.4% per year).

High Growth Earnings: ADM's earnings are forecast to grow, but not significantly.

Revenue vs Market: ADM's revenue (2.4% per year) is forecast to grow slower than the US market (7% per year).

High Growth Revenue: ADM's revenue (2.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: ADM's Return on Equity is forecast to be low in 3 years time (9.6%).


Next Steps

Past Performance

How has Archer-Daniels-Midland performed over the past 5 years?

-7.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ADM has a high level of non-cash earnings.

Growing Profit Margin: ADM's current net profit margins (2.1%) are lower than last year (2.8%).


Past Earnings Growth Analysis

Earnings Trend: ADM's earnings have declined by -7.3% per year over the past 5 years.

Accelerating Growth: ADM's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: ADM had negative earnings growth (-23.8%) over the past year, making it difficult to compare to the Food industry average (0.4%).


Return on Equity

High ROE: ADM's Return on Equity (7.2%) is considered low.


Next Steps

Financial Health

How is Archer-Daniels-Midland's financial position?


Financial Position Analysis

Short Term Liabilities: ADM's short term assets ($21.3B) exceed its short term liabilities ($13.7B).

Long Term Liabilities: ADM's short term assets ($21.3B) exceed its long term liabilities ($11.0B).


Debt to Equity History and Analysis

Debt Level: ADM's debt to equity ratio (46.3%) is considered high.

Reducing Debt: ADM's debt to equity ratio has increased from 28.9% to 46.3% over the past 5 years.

Debt Coverage: ADM's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: ADM's interest payments on its debt are well covered by EBIT (7.6x coverage).


Balance Sheet


Next Steps

Dividend

What is Archer-Daniels-Midland's current dividend yield, its reliability and sustainability?

4.03%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: ADM's dividend (4.03%) is higher than the bottom 25% of dividend payers in the US market (2.07%).

High Dividend: ADM's dividend (4.03%) is low compared to the top 25% of dividend payers in the US market (5.82%).


Stability and Growth of Payments

Stable Dividend: ADM's dividends per share have been stable in the past 10 years.

Growing Dividend: ADM's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (57.2%), ADM's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: ADM's dividends in 3 years are forecast to be well covered by earnings (42.4% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

5.3yrs

Average management tenure


CEO

Juan Luciano (58yo)

5.25s

Tenure

US$18,140,421

Compensation

Mr. Juan Ricardo Luciano has been the Chief Executive Officer of Archer Daniels Midland Company (Archer-Daniels-Midland Company) since January 1, 2015 and has been its President since February 2014. Mr. Lu ...


CEO Compensation Analysis

Compensation vs Market: Juan's total compensation ($USD18.14M) is above average for companies of similar size in the US market ($USD12.04M).

Compensation vs Earnings: Juan's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Juan Luciano
Chairman5.25yrsUS$18.14m0.093% $18.6m
Ray Young
Executive VP & CFO9.33yrsUS$6.83m0.041% $8.2m
Vincent Macciocchi
Chief Sales & Marketing Officer0.25yrUS$4.32m0.0068% $1.3m
Joseph Taets
Senior VP and President of Global Business Readiness & Global Procurement12.58yrsUS$5.32m0.019% $3.9m
Gregory Morris
Senior VP & President of Agricultural Services and Oilseeds5.42yrsUS$5.12m0.012% $2.4m
Veronica Braker
Senior Vice President of Global Operations1yrno datano data
John Stott
Group VP of Finance4.17yrsno data0.0070% $1.4m
Kristy Folkwein
Senior VP & Chief Technology Officer0.25yrno datano data
Mark Schweitzer
Vice President of Investor Relationsno datano datano data
D. Findlay
Senior VP6.75yrsUS$3.79m0.039% $7.9m

5.3yrs

Average Tenure

53yo

Average Age

Experienced Management: ADM's management team is seasoned and experienced (5.3 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Juan Luciano
Chairman5.25yrsUS$18.14m0.093% $18.6m
Patrick Moore
Independent Director16.42yrsUS$320.00kno data
Donald Felsinger
Lead Independent Directorno dataUS$335.00k0.011% $2.1m
Terrell Crews
Independent Director8.92yrsUS$325.00k0.00014% $27.9k
Kelvin Westbrook
Independent Director16.42yrsUS$320.00kno data
Pierre Dufour
Independent Director9.92yrsUS$300.00k0.0014% $275.1k
Francisco Sanchez
Independent Director5.92yrsUS$300.00k0.00078% $155.5k
Suzan Harrison
Independent Director2.92yrsUS$306.68kno data
Michael Burke
Independent Director1.92yrsUS$300.00kno data
Debra Sandler
Independent Director3.92yrsUS$300.00kno data

5.9yrs

Average Tenure

62yo

Average Age

Experienced Board: ADM's board of directors are considered experienced (5.9 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: ADM insiders have sold more shares than they have bought in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Archer-Daniels-Midland Company's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Archer-Daniels-Midland Company
  • Ticker: ADM
  • Exchange: NYSE
  • Founded: 1902
  • Industry: Agricultural Products
  • Sector: Food, Beverage & Tobacco
  • Market Cap: US$19.937b
  • Shares outstanding: 557.21m
  • Website: https://www.adm.com

Number of Employees


Location

  • Archer-Daniels-Midland Company
  • 77 West Wacker Drive
  • Suite 4600
  • Chicago
  • Illinois
  • 60601
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
ADMNYSE (New York Stock Exchange)YesCommon StockUSUSDMar 1964
ADMSWX (SIX Swiss Exchange)YesCommon StockCHCHFMar 1964
ADMXTRA (XETRA Trading Platform)YesCommon StockDEEURMar 1964
ADM *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNMar 1964
0JQQLSE (London Stock Exchange)YesCommon StockGBUSDMar 1964
ADMDB (Deutsche Boerse AG)YesCommon StockDEEURMar 1964
ARDAWBAG (Wiener Boerse AG)YesCommon StockATEURMar 1964
ADMETLX (Eurotlx)YesCommon StockITEURMar 1964
A1DM34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH REPR 1 COM NPVBRBRLDec 2019

Biography

Archer-Daniels-Midland Company procures, transports, stores, processes, and merchandises agricultural commodities, products, and ingredients in the United States and internationally. The company operates through three segments: Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. It procures, stores, cleans, and transports agricultural raw materials, such as oilseeds, corn, wheat, milo, oats, rice, and barley. The company also engages in the agricultural commodity and feed product import, export, and distribution; and structured trade finance activities. In addition, it offers vegetable oils and protein meals; ingredients for the food, feed, energy, and industrial customers; crude vegetable oils, salad oils, margarine, shortening, and other food products; and partially refined oils to produce biodiesel and glycols for use in chemicals, paints, and other industrial products. Further, the company provides peanuts, tree nuts, peanut-derived ingredients, and cotton cellulose pulp; sweeteners, corn and wheat starches, syrup, glucose, wheat flour, dextrose, and bioproducts; alcohol and other food and animal feed ingredients; ethyl alcohol and ethanol; corn gluten feed and meal, as well as distillers’ grains; and citric acids. Additionally, the company provides natural flavor ingredients, flavor systems, natural colors, proteins, emulsifiers, soluble fiber, polyols, hydrocolloids, and natural health and nutrition products, including probiotics, prebiotics, enzymes, and botanical extracts; and other specialty food and feed ingredients; edible beans; formula feeds, and animal health and nutrition products; and contract and private label pet treats and foods. It also engages in futures commission merchant and insurance services. The company was founded in 1902 and is headquartered in Chicago, Illinois. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/04/07 01:34
End of Day Share Price2020/04/06 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.