Archer-Daniels Midland Company Stock Hold Recommendation Reiterated (ADM)

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) -- Archer-Daniels Midland Company (NYSE: ADM) has been reiterated by TheStreet Ratings as a hold with a ratings score of C . The company's strengths can be seen in multiple areas, such as its attractive valuation levels, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The gross profit margin for ARCHER-DANIELS-MIDLAND CO is currently extremely low, coming in at 4.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.30% trails that of the industry average.
  • Net operating cash flow has significantly decreased to $637.00 million or 73.55% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Archer-Daniels-Midland Company engages in the manufacture and sale of protein meal, vegetable oil, corn sweeteners, flour, biodiesel, ethanol, and other value-added food and feed ingredients. The company has a P/E ratio of 15.3, equal to the average food & beverage industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Archer-Daniels Midland has a market cap of $18.5 billion and is part of the consumer goods sector and food & beverage industry. Shares are down 2% year to date as of the close of trading on Thursday.

You can view the full Archer-Daniels Midland Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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