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Why Archer-Daniels-Midland (ADM) Stock Is Up Today

Stocks in this article: ADM

NEW YORK (TheStreet) -- Shares of Archer-Daniels-Midland Co. (ADM) are up 1.30% to $50.51 after the company announced today an agreement to sell its global chocolate business to Cargill for $440 million, subject to a customary working-capital adjustment.

The proposed sale is expected to close during the first half of 2015 and is subject to regulatory approval and other customary conditions.

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Included in the sale are chocolate manufacturing operations located in several locations in the U.S. and abroad. Approximately 700 employees will transfer to Cargill with the sale.

At the time of closing, ADM will be ending cocoa processing operations at Hazleton, PA, resulting in the elimination of about 90 positions there.

TheStreet Ratings team rates ARCHER-DANIELS-MIDLAND CO as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate ARCHER-DANIELS-MIDLAND CO (ADM) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 138.23% and other important driving factors, this stock has surged by 43.78% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ADM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food Products industry. The net income increased by 139.0% when compared to the same quarter one year prior, rising from $223.00 million to $533.00 million.
  • ADM's debt-to-equity ratio is very low at 0.28 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 1.04, which illustrates the ability to avoid short-term cash problems.
  • ARCHER-DANIELS-MIDLAND CO reported significant earnings per share improvement in the most recent quarter compared to 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, ARCHER-DANIELS-MIDLAND CO reported lower earnings of $2.03 versus $2.08 in the prior year. This year, the market expects an improvement in earnings ($3.05 versus $2.03).
  • You can view the full analysis from the report here: ADM Ratings Report
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