Monsanto Company Stock Buy Recommendation Reiterated (MON)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- Monsanto Company (NYSE:MON) has been reiterated by TheStreet Ratings as a buy with a ratings score of B- . The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, good cash flow from operations, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

• ACTIVE STOCK TRADERS: Get trading ideas for stocks under $10 for less than $6/week. Start with a 14-Day Free Trial.

Highlights from the ratings report include:

• MON's debt-to-equity ratio is very low at 0.18 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.45, which illustrates the ability to avoid short-term cash problems.
• The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Chemicals industry and the overall market on the basis of return on equity, MONSANTO CO has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
• Net operating cash flow has increased to $2,198.00 million or 17.54% when compared to the same quarter last year. Despite an increase in cash flow, MONSANTO CO's average is still marginally south of the industry average growth rate of 18.09%.
• MONSANTO CO has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MONSANTO CO increased its bottom line by earning $3.78 versus $2.96 in the prior year. This year, the market expects an improvement in earnings ($4.38 versus $3.78).
• MON, with its decline in revenue, slightly underperformed the industry average of 5.3%. Since the same quarter one year prior, revenues slightly dropped by 6.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

Monsanto Company, together with its subsidiaries, provides agricultural products for farmers in the United States and internationally. It operates in two segments, Seeds and Genomics, and Agricultural Productivity. The company has a P/E ratio of 24.1, above the average chemicals industry P/E ratio of 23.6 and above the S&P 500 P/E ratio of 17.7. Monsanto has a market cap of $47.59 billion and is part of the basic materials sector and chemicals industry. Shares are up 26.3% year to date as of the close of trading on Thursday.

You can view the full Monsanto Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

FREE from Real Money's Jim Cramer: Winners and Losers Election 2012 - Steps to take NOW so you can profit no matter who is in charge! Free Download Now

For more information on Monsanto Company click any of the following:

• Monsanto Company Stock Price

• Monsanto Company Analyst Ratings

• Monsanto Company Key Stats & Profile

• Monsanto Company Earnings

• Monsanto Company Ratio Comparison

• Monsanto Company Growth Rates

• Monsanto Company Balance Sheet

• Monsanto Company Cash Flow

• Monsanto Company Income Statement