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If you are looking for a textbook downtrend, you need look no further than agricultural giant Monsanto (MON). Since hitting a high just above $85 in early January, Monsanto has been on an uninterrupted escalator down to $45.Unfortunately for Monsanto, today's disappointing earnings announcement is going to do nothing to help change that situation.
Monsanto announced that it only earned $0.70 per share last quarter -- compared to the $1.25 per share the company earned last year. So earnings are off by 44% while the stock price is off by 47% this year.
It looks like poor Roundup and other glyphosate-based herbicide sales are largely to blame for Monsanto's struggles. It's not that farmers and others aren't buying as much herbicide. The problem is the price of these herbicides has declined from $35 a gallon a few years ago to current levels of $8 to $11 a gallon.
Fans of the movie Food, Inc. are certainly happy to see Monsanto struggling, but shareholders may want to consider cutting their losses at this point as it doesn't look like Monsanto is going to recover anytime soon.
Analyst Expectations: UBS, the last firm to issue a rating on Monsanto, reiterated its Buy rating but dropped its price target from $83 to $70.
Fundamental Analysis: Monsanto has a less-than-stellar fundamental outlook -- based on the return on equity (ROE) the company is providing and the stock's PEG ratio.
Monsanto has an ROE of 13.04%. When you compare that to Potash's (POT) ROE of 19.47% and Syngenta's (SYT) ROE of 21.05% -- two other stocks in the Agricultural Chemicals industry -- you can see that Monsanto is providing a weaker return to its owners.
Monsanto has a PEG ratio of 1.81 -- which is high compared to the industry average of 1.45. Typically, a PEG ratio less than 1 is a sign the stock price is not overvalued.
Technical Analysis: Monsanto has lost 6.94% during the past month and is currently trading well below its 20-day, 50-day and 200-day moving averages.
Disclosure: Hansen does not own shares of the stocks discussed above. Positions can change without notice.
Analyst Expectations: UBS, the last firm to issue a rating on Monsanto, reiterated its Buy rating but dropped its price target from $83 to $70.
Fundamental Analysis: Monsanto has a less-than-stellar fundamental outlook -- based on the return on equity (ROE) the company is providing and the stock's PEG ratio.
Monsanto has an ROE of 13.04%. When you compare that to Potash's (POT) ROE of 19.47% and Syngenta's (SYT) ROE of 21.05% -- two other stocks in the Agricultural Chemicals industry -- you can see that Monsanto is providing a weaker return to its owners.
Monsanto has a PEG ratio of 1.81 -- which is high compared to the industry average of 1.45. Typically, a PEG ratio less than 1 is a sign the stock price is not overvalued.
Technical Analysis: Monsanto has lost 6.94% during the past month and is currently trading well below its 20-day, 50-day and 200-day moving averages.
Disclosure: Hansen does not own shares of the stocks discussed above. Positions can change without notice.
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