Factors to Decide Archer Daniels' (ADM) Fate in Q1 Earnings

Archer Daniels Midland Company ADM is slated to report first-quarter 2022 results on Apr 26, before market open. The Zacks Consensus Estimate for the company’s first-quarter earnings is pegged at $1.35 per share, which suggests a decline of 2.9% from the year-ago quarter’s reported figure. However, the consensus mark has moved up 1.5% in the past seven days. For first-quarter revenues, the consensus mark is pegged at $19.1 billion, suggesting 1.3% growth from the prior-year quarter’s reported figure.

In the last reported quarter, the company delivered an earnings surprise of 10.3%. Its earnings outperformed the Zacks Consensus Estimate by 21.9%, on average, in the trailing four quarters.

Key Factors to Note

Archer Daniels has been gaining from solid demand and continued growth in the Nutrition segment. Significant gains in the Human and Animal Nutrition units have been aiding the Nutrition business. The trends are expected to have continued in the first quarter.

Within the Human Nutrition unit, the positive mix in EMEAI, the solid performance in North America and strength in the flavors business are expected to have aided the company. Sales growth in plant-based proteins is likely to have aided the Specialty Ingredients unit. In contrast, robust sales in bioactives and fermentation are expected to have contributed to the Health & Wellness category. Also, the company’s efforts to build a one-stop-shop with top-notch ingredients and solutions for the Human Nutrition unit by investing in bolt-on acquisitions are likely to have aided the first-quarter performance.

The Animal Nutrition unit is expected to have witnessed a continued positive demand for amino acids. The company’s recent buyouts and joint ventures are expected to have leveraged the rising demand for pet food, sustainable fuel and plant-based products, in turn, aiding the first-quarter performance.

The company has been making efforts to develop products, boost operating capabilities and expand its solutions portfolio, which forms part of its Carbohydrate Solutions unit. Such endeavors are expected to have aided the company’s top line in the quarter under review.

However, Archer Daniels has been exposed to headwinds, including higher performance-related compensation, project-related costs, and the shifting of costs from business segments to the centralized centers of excellence in the supply chain and operations. Also, higher input costs, including energy costs in EMEA in its Starches and Sweeteners subsegment within the Carbohydrate Solutions segment, are anticipated to have been concerning.

Archer Daniels Midland Company Price and EPS Surprise

Archer Daniels Midland Company price-eps-surprise | Archer Daniels Midland Company Quote

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Archer Daniels this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Archer Daniels has a Zacks Rank #1 and an Earnings ESP of -0.30%.

Stocks With Favorable Combination

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to deliver an earnings beat.

Hershey HSY currently has an Earnings ESP of +1.84% and a Zacks Rank of 2. The company is expected to register top-line growth when it reports the first-quarter 2022 numbers. The Zacks Consensus Estimate for ADM’s quarterly revenues is pegged at $2.5 billion, which suggests growth of 8.2% from the prior-year quarter’s reported figure. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Hershey’s quarterly earnings has been unchanged in the past 30 days at $2.10 per share, suggesting a 9.4% decline from the year-ago reported number. HSY has delivered an earnings beat of 4.3%, on average, in the trailing four quarters.

Coca-Cola KO currently has an Earnings ESP of +0.75% and a Zacks Rank #3. KO is likely to register top-line growth when it reports the first-quarter 2022 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $9.91 billion, which suggests growth of 9.9% from that reported in the prior-year quarter.

However, the Zacks Consensus Estimate for Coca-Cola’s quarterly earnings has moved up by a penny in the past 30 days to 58 cents per share, suggesting an increase of 5.5% from the year-ago quarter’s reported number. KO has delivered an earnings beat of 13.5%, on average, in the trailing four quarters.

Corteva CTVA, currently has an Earnings ESP of +0.70% and a Zacks Rank #3. CTVA is anticipated to register top and bottom-line growth when it reports the first-quarter 2022 results. The Zacks Consensus Estimate for Corteva’s quarterly revenues is pegged at $4.53 billion, indicating an improvement of 8.5% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for Corteva’s bottom line has been unchanged in the past 30 days to 81 cents per share. However, the consensus estimate for CTVA suggests growth of 2.5% from the year-ago quarter’s reported figure.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.