Monsanto guided as if it expects to continue to grow market share, raising full year earnings-per-share guidance to a range of $4.40 to $4.50. These numbers are expected to be two cents higher on an as-reported basis. Plus, management also affirmed prior free-cash-flow guidance $1.8 billion to $2 billion.
Investors rejoiced, sending the stock to a new 52-week high of $107. These are solid numbers indeed. But to the extent they make up for some of the underlying weaknesses that I've highlighted above, I don't think that's justified, especially since the Street was modeling for full-year EPS of $4.58 per share.
That said, there are still reasons to be bullish this company in the long term. The company's product pipeline is unmatched. Fundamentally, the company remains solid from the standpoint of revenue growth, financial position with reasonable debt levels and an impressive record of earnings per share growth with expanding profit margins.
At $105 per share, the stock's not cheap, given its P/E of 22. Even if fair value were to go higher to the $110 to $115 range, which is very realistic, it still doesn't present an exciting premium. But this is a well-managed company that can post some strong long-term gains with some operational improvements. Investors looking for exposure to agriculture should really consider this name. Finally, the company deserves a break. Monsanto is far from the "evil-doer" many investors are making it out to be. Ask yourself, since when has feeding the world become such a bad thing? At the time of publication, the author held no position in any of the stocks mentioned. Follow @saintssense This article was written by an independent contributor, separate from TheStreet's regular news coverage.
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