NEW YORK (TheStreet) -- Shares of Archer-Daniels-Midland Co. (ADM) are higher by 2.03% to $46.70 after the company earlier today announced that it's acquiring Wild Flavors GmbH, giving ADM the ability to offer food and beverage companies a comprehensive suite of systems to enhance and improve their products.
In an all-cash transaction valued at approximately 2.3 billion euros enterprise value, ADM will pay 2.2 billion euros, or about $2 billion, to Wild Flavors shareholders Dr. Hans-Peter Wild and funds affiliated with Kohlberg Kravis Roberts & Co. L.P. (KKR).
TheStreet Ratings team rates ARCHER-DANIELS-MIDLAND CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate ARCHER-DANIELS-MIDLAND CO (ADM) 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 reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, ADM's share price has jumped by 29.96%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- ADM's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.77 is somewhat weak and could be cause for future problems.
- ARCHER-DANIELS-MIDLAND CO' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, ARCHER-DANIELS-MIDLAND CO reported lower earnings of $2.03 versus $2.08 in the prior year. This year, the market expects an improvement in earnings ($2.99 versus $2.03).
- ADM, with its decline in revenue, slightly underperformed the industry average of 3.1%. Since the same quarter one year prior, revenues slightly dropped by 4.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: ADM Ratings Report