Monsanto Company Stock Buy Recommendation Reiterated (MON)

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) -- Monsanto Company (NYSE: MON) has been reiterated by TheStreet Ratings as a buy with a ratings score of A . The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

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Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 0.6%. Since the same quarter one year prior, revenues rose by 20.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MON's debt-to-equity ratio is very low at 0.17 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 1.27, which illustrates the ability to avoid short-term cash problems.
  • MONSANTO CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MONSANTO CO increased its bottom line by earning $3.78 versus $2.96 in the prior year. This year, the market expects an improvement in earnings ($4.53 versus $3.78).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 169.0% when compared to the same quarter one year prior, rising from $126.00 million to $339.00 million.
  • The gross profit margin for MONSANTO CO is rather high; currently it is at 52.70%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 11.53% is above that of the industry average.

Monsanto Company, together with its subsidiaries, provides agricultural products for farmers. It operates in two segments, Seeds and Genomics, and Agricultural Productivity. Monsanto has a market cap of $53.3 billion and is part of the basic materials sector and chemicals industry. The company has a P/E ratio of 23.9, above the S&P 500 P/E ratio of 17.7. Shares are up 5.1% year to date as of the close of trading on Friday.

You can view the full Monsanto Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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