NEW YORK (TheStreet) -- Archer-Daniels-Midland (ADM) - Get Report stock is surging by 3.10% to $36.94 in early afternoon trading on Monday, after settling a lawsuit over high-fructose corn syrup advertisements.
Big sugar companies, such as Western Sugar Cooperative, sued the CornRefinersAssociation over an advertising dispute in 2011. Archer-Daniels-Midland, which processes corn, wheat and cocoa, is a member of the association.
The suit said that the association's advertisements used the term "corn sugar" to describe high-fructose corn syrup, the Wall Street Journal reports.
Seeking $1.5 billion in damages, sugar companies objected to the advertising campaign's description of high-fructose corn syrup as "natural" and that it is "nutritionally the same as table sugar," the Journal reports.
The details of the settlement agreement are confidential, according to a statement released by the association.
Separately, TheStreet Ratings team rates ARCHER-DANIELS-MIDLAND CO as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate ARCHER-DANIELS-MIDLAND CO (ADM) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.71 is somewhat weak and could be cause for future problems.
- ADM, with its decline in revenue, underperformed when compared the industry average of 6.5%. Since the same quarter one year prior, revenues slightly dropped by 8.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for ARCHER-DANIELS-MIDLAND CO is currently extremely low, coming in at 7.88%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.52% significantly trails the industry average.
- Net operating cash flow has significantly decreased to $692.00 million or 79.93% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: ADM
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.