Archer Daniels Midland Company ADM has been climbing up the charts, thanks to solid gains from its strategic efforts and the Nutrition segment. Management is focused on productivity and innovation to drive overall growth. ADM is steadily progressing with efforts, including optimization to the core, operational efficiencies and business expansion. Moreover, its Project Readiness initiative bodes well. Such endeavors have been aiding ADM’s Nutrition segment for a while now.
Shares of this nutrition leader have increased 50.2% over the past six months, outperforming the industry’s 14.2% growth. A VGM Score of A for this currently Zacks Rank #2 (Buy) player further demonstrates strength.
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With respect to boosting productivity, Archer Daniels has been advancing its centers and increasing the supply-chain operations. ADM continued to roll out the 1ADM business transformation program and implement the standardized business processes. ADM’s innovation capabilities include expansions and investments toward enhancing the customer experience. ADM also looks forward to leveraging producer relationships and boosting the use of the state-of-the-art digital technology.
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The innovation aspect covers the complete range of products, solutions and capabilities to efficiently cater to the customers’ needs. ADM is on track making investments in technology, which include driving the digital capabilities and investing further in product research and development. Management continues to adapt to the organizational structure to meet operational excellence and set goals.
Additionally, Archer Daniels is on course with the Readiness targets of improving business, standardizing functions and enriching consumers’ experience. ADM also pursues betterment in its key businesses. ADM is consistently expanding its footprint in the fast-growing alternative protein.
Recently, Archer Daniels shared expansion plans to tap flourishing demand for the alternative proteins. ADM looks forward to making investments of roughly $300 million to expand its Decatur, IL, alternative protein production. Moreover, it will enhance the alternative protein capabilities by opening a state-of-the-art Protein Innovation Center in Decatur. The center will support innovation and efficiently cater to the customer needs.
The latest expansion will significantly improve Archer Daniels’ alternative-protein capabilities. This will boost soy protein concentrate capacity, almost doubling the extrusion capacity at the Decatur complex. The project is likely to be concluded in first-quarter 2025, subject to all the applicable approvals. The production capabilities will drastically increase on the back of the latest technologies and processes, including the top control technology.
Nutrition Unit Bodes Well
Management remains optimistic about Archer Daniels’ Nutrition segment on significant gains in the Human and Animal Nutrition units. In fourth-quarter 2021, revenues at the segment rose 19% year over year while the adjusted operating profit grew 26%. The Human Nutrition unit gained from strength across all businesses. Continued momentum in Flavors, driven by an improved product mix in EMEAI and a strong performance in North America, bodes well.
The animal nutrition unit is steadily gaining from strength in amino acids. Backed by progress in both the Human and Animal Nutrition units, the Nutrition segment expects more than 15% growth in operating profit during 2022.
Bottom Line
Archer Daniels appears a solid investment bet, buoyed by all the aforesaid tailwinds. Additionally, analysts grew quite bullish on the stock’s prospects, evident from its higher earnings estimate revisions. The Zacks Consensus Estimate for 2022 earnings of $5.20 and the same of $5.16 for 2023 bottom line indicates growth of 0.8% and 1.2%, respectively, in the past 30 days.
More Top-Ranked Consumer Staples Stocks
Some other top-ranked stocks in the Consumer Staples sector are Flower Foods FLO, Albertsons Companies ACI and Sysco SYY.
Flower Foods currently has a Zacks Rank of 2. FLO has a trailing four-quarter earnings surprise of 9%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Flower Foods’ current financial-year sales and earnings per share (EPS) suggests growth of 7.2% and 4%, respectively, from the corresponding year-ago period’s reported figures.
Albertsons Companies currently flaunts a Zacks Rank of 2. ACI has a trailing four-quarter earnings surprise of 30.6%, on average.
The Zacks Consensus Estimate for Albertsons Companies’ current financial-year sales suggests growth of 2.6% from the year-ago period’s reported figure.
Sysco is currently Zacks #2 Ranked. SYY has a trailing four-quarter earnings surprise of 3.7%, on average.
The Zacks Consensus Estimate for Sysco’s current financial-year sales and earnings suggests growth of 30.4% and 120.1%, respectively, from the corresponding year-ago period’s reported figures.
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