Archer-Daniels-Midland Company (ADM) Buy or Sell Stock Guide

Last updated: Jul 12, '19

Are you looking for the analysis of Archer-Daniels-Midland Company (ADM) stock? Are you wondering what the bulls and the bears say about it?

If so, you came to the right place. In this stock guide, we will share with you 9 reasons to buy and 5 reasons to sell ADM stock. You’ll get a perspective on what the bulls and the bears say about it.

The analysis below may be also helpful to you if you have any of the following questions about ADM stock:

  • Is ADM a buy or a sell?
  • Should I sell or hold ADM stock today?
  • Is ADM a good buy / investment?
  • What are ADM analyst opinions, recommendations and ratings?

Let’s start with the bull case. Here are the reasons to buy ADM stock:

1. With a global network of processing, storage, and transportation assets, ADM's size gives the company scale advantages over regional competitors.

2. The firm's trading operations are often able to generate arbitrage opportunities from extensive market knowledge produced by the global origination and logistics network.

3. As a major processor of soybeans--a key component in animal feeds--Archer Daniels Midland should benefit as emerging economies consume more meat.

4. ADM profitability is improving. The YoY profit margin change was 0.19percentage points. See ADM profitability chart.

5. ADM forward dividend yield is 3.35%, higher than the industry (0.45%) and sector (0.56%) forward dividend yields. See ADM forward dividend chart.

6. ADM Price/Book ratio is 1.24, and it’s low compared to its industry peers’ P/B ratios. See ADM forward Price/Book ratio chart.

7. ADM Price/Sales ratio is 0.37, and it’s low compared to its industry peers’ P/S ratios. See ADM forward Price/Sales ratio chart.

8. ADM average analyst rating is Buy. See ADM analyst rating chart.

9. ADM average analyst price target ($50.36) is above its current price ($41.73). See ADM price target chart.

Now that you understand the bull case, let’s look at the reasons to sell ADM stock (i.e., the bear case):

1. Corn ethanol demand in the U.S. is propped up by the renewable fuel standard, creating artificial demand that would not be present if the standard were eventually removed.

2. Profitability is subject to operating rates in each segment, which can be negatively affected by a number of factors outside ADM's control.

3. As a trader of commodity products, ADM is essentially a price taker competing in a market where similar products are available from rivals.

4. ADM quarterly revenue growth was -1.45%, lower than the industry and sector average revenue growth (2.79% and 3.41%, respectively). See ADM revenue growth chart.

5. ADM PEG ratio (P/E adjusted for growth) is 19.61, and it’s high compared to its industry peers’ PEG ratios. See ADM PEG chart.

Now let's look at the key statistics for ADM:

Metrics ADM
Price $40.17
Average Price Target / Upside $50.36 / 25.37%
Average Analyst Rating Buy
Industry Farm Products
Sector Consumer Defensive
Number of Employees 31,600
Market Cap $22.87B
Forward P/E Ratio 12.2549
Price/Book Ratio 0.3611
PEG 19.1535
Revenue (TTM) $64.12B
YoY Quarterly Revenue Growth -1.4506011500261369%
Profit Margin 2.573300062383032%

What are your thoughts on ADM?

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