This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

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.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
MON $118.44 0.00%
AAPL $128.95 0.00%
FB $78.99 0.00%
GOOG $537.90 0.00%
TSLA $226.03 0.00%

Markets

DOW 18,024.06 +183.54 1.03%
S&P 500 2,108.29 +22.78 1.09%
NASDAQ 5,005.3910 +63.9670 1.29%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs