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Can Monsanto Hold its Momentum with 2Q Earnings?

NEW YORK ( TheStreet) -- Shares of Monsanto (MON - Get Report) are up 12% year-to-date and are trading just off a new 52-week high. However, regardless of what the stock price may say, this is not an extraordinarily well-liked company.

Despite the strong rebound in the stock and consistent operational improvements by management, bears are still looking for ways to discredit the company while dismissing all of the recent market advantages management has created. Although I don't own the stock, I've found myself coming to the company's defense quite a bit. But it's time for some perspective.

Let's Have Some Perspective

One of the most popular cited bear arguments suggests that Monsanto has been alienating farmers and will continue to do so at an alarming rate. Bears fear that the company will eventually lose market share to rivals like DuPont (DD) and Syngenta (SYT). However, Monsanto's recent earnings performances tell a different story.

The company is coming off an excellent first-quarter, during which revenue shot up almost 21%. While the Street was already modeling for a strong performance, Monsanto still managed to beat estimates by more than 10%. Nevertheless, bears still found ways to point out the negatives.

While it's true that soybeans, which declined 5%, along with sub-par performances in cotton and vegetables, are legitimate concerns, the company was able to offset this with dominant performances in seeds and traits, which posted 14% year-over-year growth.

When coupled with strong results from corn, which arrived higher by 27%, it seems management deserves the benefit of the doubt that it will shore up the company's weaknesses. Besides, it's not as if profitability was adversely impacted.

Monsanto was able to advance first-quarter gross margin by almost 3%, which resulted in a 15% improvement in gross profit. Here too, is another sign of strong management, which continues to figure out ways to make the best out of difficult macro environments. What's more, not only did operating income arrive better than expected, but it more than doubled year-over-year.
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