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Citigroup Upgrades Archer Daniels Midland to a ‘Buy’

Gabriel Kane

Yesterday’s Consumer Pops and Drops: LNCE, NKE, and FLO

(Continued from Prior Part)

Price movement

Archer Daniels Midland (ADM) has a market cap of $25.6 billion. It rose by 1.4% to close at $43.07 per share on May 26, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 12.3%, 8.8%, and 19.4%, respectively, on the same day.

This means that ADM is trading 10.9% above its 20-day moving average, 14.1% above its 50-day moving average, and 12.8% above its 200-day moving average.

Related ETFs and peers

The Vanguard Large-Cap ETF (VV) invests 0.15% of its holdings in ADM. This ETF tracks a market-cap-weighted index that covers 85% of the market capitalization of the US equity market.

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The Consumer Staples Select Sector SPDR ETF (XLP) invests 1.4% of its holdings in ADM. The ETF tracks a market-cap-weighted index of consumer staples stocks drawn from the S&P 500. The YTD price movement of XLP was 5.4% on May 26, 2016.

The market caps of ADM’s competitors are as follows:

  • Bunge Limited (BG) — $9.3 billion

  • Ingredion (INGR) — $8.7 billion

Citigroup (C) has upgraded Archer Daniels Midland’s rating to from “neutral” to “buy.”

Performance in 1Q16

Archer Daniels Midland (ADM) reported fiscal 1Q16 revenue of $14.4 billion, a fall of 17.8% compared to revenue of $17.5 billion in fiscal 1Q15. It reported asset impairment, exit, and restructuring costs of $13 million in fiscal 1Q16.

The operating profit of its Agricultural Services and Oilseeds Processing segments fell by 61.3% and 44.6%, respectively. The operating profit of the Corn Processing and Wild Flavors & Specialty Ingredients businesses rose by 15.9% and 2.9%, respectively, in fiscal 1Q16 compared to fiscal 1Q15.

Its net income and EPS (earnings per share) fell to $2.3 million and $0.39, respectively, in fiscal 1Q16, compared to $4.9 million and $0.77, respectively, in fiscal 1Q15.

Archer Daniels Midland’s cash and cash equivalents and operating working capital fell by 20.7% and 5.9%, respectively, in fiscal 1Q16 compared to fiscal 1Q15. Its debt-to-equity ratio rose to 0.54x in fiscal 1Q16 compared to 0.51x in fiscal 1Q15.

ADM sold sugarcane operations

Archer Daniels Midland (ADM) has completed the sale of its sugarcane ethanol operations in Limeira do Oeste, in the Brazilian state of Minas Gerais.

In the next part, we’ll take a look at Koninklijke Philips (PHG).

Continue to Next Part

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