Will This Upgrade Help Monsanto (MON) Stock Today? (Update)

Update (9:35 a.m.): Updated with Thursday market open information.

NEW YORK (TheStreet) -- J.P. Morgan upgraded Monsanto  (MON) to "overweight." The firm noted the company can increase balance sheet leverage and possibly break up to create value.

The stock was up 1.94% to $116.64 at 9:33 a.m. on Thursday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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Separately, TheStreet Ratings team rates MONSANTO CO as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate MONSANTO CO (MON) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."

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

  • Despite its growing revenue, the company underperformed as compared with the industry average of 14.1%. Since the same quarter one year prior, revenues slightly increased by 6.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • MON's debt-to-equity ratio is very low at 0.26 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 1.16, which illustrates the ability to avoid short-term cash problems.
  • MONSANTO CO has improved earnings per share by 8.1% 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 $4.56 versus $3.78 in the prior year. This year, the market expects an improvement in earnings ($5.25 versus $4.56).
  • The gross profit margin for MONSANTO CO is rather high; currently it is at 54.88%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 11.70% is above that of the industry average.
  • Net operating cash flow has slightly increased to $1,698.00 million or 8.22% when compared to the same quarter last year. Despite an increase in cash flow, MONSANTO CO's average is still marginally south of the industry average growth rate of 13.35%.
  • You can view the full analysis from the report here: MON Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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