It's pretty clear that the share price of food processing giant Archer Daniels Midland Co. (NYSE: ADM) is closely tied to corn prices. Must be good news for ADM then that corn prices are up as demand for ethanol is at an all time high, and corn syrup seems to be in everything these days. Of course, things are never that clear cut.
It seems the high price of corn syrup may have beverage makers and others reconsidering their choice of sweeteners. And the high price of corn appears to be leading to a surplus in the supply of corn, which of course is bound to drive prices back down.
So where does that leave ADM when it reports Q1 2007 earnings next week? According to Thomson Financial, the current consensus estimates are for revenue of $9.45 billion, or 62 cents per share. Last quarter the actual EPS was 67 cents; a year ago, 46 cents. The analysts' consensus recommendations is buy, with seven out of nine of them rating ADM a buy or strong buy. That's a change from the consensus recommendation of hold, just a month ago. The mean price target is $41.25. ADM closed Thursday at $39.03.
The share price has been trending upward this past quarter from a 52-week low of $30.20 in early January, and after slumping in 2006 after the 52-week high of $46.71 last May. The five-year growth rate is 34.2%, and the current PE is 14.68.
Cramer likes ADM, listing it as one of his ethanol picks. What's not to like? Thomson Financial also points out that ADM has offered upside surprises of more than 10% in its last four quarters, and the average return one month after ADM's positive surprises is 2.6%.
The question is, will the self-proclaimed Supermarket to the World offer up another positive surprise on Tuesday?
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Reader Comments (Page 1 of 1)
4-26-2007 @ 7:23PM
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6-17-2007 @ 7:59PM
John said...
With Exxon reporting most every Quarter a profit of some 3 BILLION dollars in profit margin, you as I must ask if they are 1 of the 2 Leading OIL Refineries and making this much in profit, why is it that we are paying more for GASOLINE?
I have a great IDEA;
If everyone just stops buying from Exxon and B P than it will hit them where it hurts as they are the leaders in the OIL Refineries and with a DRASTIC CUT from thier Continued BILLION DOLLAR PROFITS both INDUSTRIES would be forced to reduce the price of CRUDE OIL.
JUST SIT AND THINK ABOUT IT?
THESE COMPANIES CONTINUE TO MAKE BILLIONS OF DOLLARS IN PROFITS AND WE KEEP PAYING>
GO ELSEWHERRE AND LETS SEND THEM A MESSAGE THAT WILL FORCE THESE COMPANIES TO REDUCE THIER GASOLINE PRICES.
HEY IT'S WORTH A TRY, WHAT DO WE HAVE TO LOOSE BY GOING ELSEWHERE FOR OUR GASOLINE?
NOTHING BUT THEY HAVE BILLIONS TO LOOSE JUST TELL ONE PERSON AND LET THE TRICKEL EFFECT TAKE ACTION AND I BET THE PRICES WILL FALL AS THIER PROFITS DO THE SAME. ! ! ! ! !