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. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

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Highlights from the ratings report include:
  • MON's revenue growth has slightly outpaced the industry average of 5.5%. Since the same quarter one year prior, revenues rose by 15.2%. 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. To add to this, MON has a quick ratio of 1.62, which demonstrates the ability of the company to cover short-term liquidity needs.
  • MONSANTO CO has improved earnings per share by 22.4% 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 ($4.60 versus $3.78).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Chemicals industry average. The net income increased by 22.5% when compared to the same quarter one year prior, going from $1,211.00 million to $1,483.00 million.
  • The gross profit margin for MONSANTO CO is rather high; currently it is at 58.90%. Regardless of MON's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MON's net profit margin of 27.10% significantly outperformed against the industry.

Monsanto Company, together with its subsidiaries, provides agricultural products for farmers worldwide. It operates in two segments, Seeds and Genomics, and Agricultural Productivity. Monsanto has a market cap of $56.2 billion and is part of the basic materials sector and chemicals industry. The company has a P/E ratio of 23.00, above the S&P 500 P/E ratio of 18.00. Shares are up 11.6% year to date as of the close of trading on Wednesday.

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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