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

Last updated: Sep 23, '17

The analysis below may be 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 / a good investment?
  • What are ADM analyst opinions, recommendations, ratings?

Here are ADM stock buy reasons/signals:

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 forward dividend yield is 3.01%, higher than the industry (1.02%) and sector (1.10%) forward dividend yields.

5. ADM forward P/E ratio is 14.72, and it’s low compared to its industry peers’ P/E ratios.

6. ADM Price/Book ratio is 1.37, and it’s low compared to its industry peers’ P/B ratios.

7. ADM Price/Sales ratio is 0.38, and it’s low compared to its industry peers’ P/S ratios.

Here are ADM stock sell reasons/signals:

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 -4.40%, lower than the industry and sector average revenue growth (4.26% and 2.88%, respectively).

5. ADM profitability is declining. The YoY profit margin change was -0.68pp.

6. ADM average analyst price target ($42.43) is below its current price ($43.37).

7. ADM short interest (days to cover the shorts) ratio is 3.71. The stock garners more short interest than the average industry, sector or S&P 500 stock.

What are your thoughts on ADM?

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