Monsanto (MON) Stock is the Subject of Today's 'Chart of the Day' Analysis

NEW YORK (TheStreet) -- Monsanto (MON) shares are down 1% to $112.99 in trading on Monday and is the subject of today's Trifecta Stocks 'Chart of the Day' analysis.

Monsanto is in the midst of pursuing Syngenta AG (SYT), which rejected its $45 billion takeover offer last week saying that the offer for a $2 billion reverse breakup fee if regulators block the deal was too small.

Monsanto had previously pursued an all stock merger with its agribusiness rival in 2011 that was also rejected.

"This approach in 2015 shows that over the last four years Monsanto has recognized the attractiveness of Syngenta's integrated strategy and weakness of their own narrow seeds and traits strategy," a Syngenta spokesman said, according to the Wall Street Journal.

"Between July 1, 2011 and April 30, 2015 - the date our current proposal was reported in the media - Syngenta's stock price has increased by 10 percent and Monsanto's stock price has increased by 57 percent," countered a Monsanto spokesman, according to the Journal.

Insight from TheStreet's Research Team:

Here is what Trifecta Stocks Bryan Ashenburg and Bob Lang had to say about what the stock's chart can tell you about its future performance.

Monsanto's chart appears to be on the bottom side of a trading range from a big picture view, but the daily action has been quite bearish.

The company is in pursuit of Swiss agrochemical name Syngenta but continues to be rebuffed. And as the offer rises, Monsanto's stock gets taken down a notch.

The heavy volume reversal in mid-May is circled, right where a price was rejected. The Moving Average Convergence Divergence sell signal is still in effect as well.

Relative Strength has been creeping lower and the slope shows it. This stock may now be rolling over. Although some support lies just below $111, we would not be the first ones to step in here.

DISCLOSURE: Trifecta Stocks has no position in MON. This Alert is a technical analysis of the company's chart, and we are not taking any action in the stock at this time.

-Bryan Ashenberg and Bob Lang, 'Chart of the Day: MON', 6/15/2015.

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 several positive factors, 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 expanding profit margins, good cash flow from operations, notable return on equity, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."

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

  • The gross profit margin for MONSANTO CO is rather high; currently it is at 61.94%. 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 27.41% significantly outperformed against the industry.
  • Net operating cash flow has increased to $169.00 million or 14.18% 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 15.87%.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to other companies in the Chemicals industry and the overall market on the basis of return on equity, MONSANTO CO has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • MONSANTO CO's earnings per share declined by 7.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MONSANTO CO increased its bottom line by earning $5.13 versus $4.56 in the prior year. This year, the market expects an improvement in earnings ($5.76 versus $5.13).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 14.1%. Since the same quarter one year prior, revenues fell by 10.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

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