Dec. 4, 2014, 3:58 PM
- Archer Daniels Midland (ADM -1.6%) is downgraded to Hold from Buy with a $53 price target at Miller Tabak, which sees a longer than expected path to $4 EPS even with value-add margin opportunities ahead.
- While ADM's $10B revenue target for the Wild Flavors and Specialty Ingredients segment is exciting, the firm finds it difficult to translate the target into near-term reality, especially as commentary on EBITDA margins and near-term growth was light on details.
- ADM has plenty of positives, but the firm says it sees no clear catalyst to take EPS growth above its expectation of 9%-11% average growth through 2016.
Dec. 3, 2014, 6:59 PM
- At today's investor day, ADM set a "medium-term" dividend payout target range of 30%-40%; the company's historical range has been 20%-25%. ADM currently pays a $0.24/share quarterly dividend, good for a 1.8% yield.
- Also: The company set a goal of growing its Wild Flavors and Specialty Ingredients sales by 4x to $10B, and of reaping $350M/year in R&D cost savings by 2019.
- ADM reiterates its long-term goal of having a 10% adjusted ROIC - 200 bps above an 8% weighted-average cost of capital.
Dec. 2, 2014, 5:58 PM
- U.S. ethanol production is likely to continue at a record rate despite its rare premium to gasoline, as cheap corn, high biofuel prices and even cool weather provide ideal conditions and strong profit margins.
- "The mentality is that everyone is running," says Todd Becker, CEO of Green Plains (NASDAQ:GPRE), the no. 4 U.S. ethanol producer behind Archer Daniels Midland (NYSE:ADM), POET LLC and Valero Energy (NYSE:VLO).
- Export demand for ethanol is booming, up more than 40% YTD, helping to make ethanol more expensive than gasoline in some domestic markets; meanwhile, costs to make ethanol have declined in the wake of a record U.S. harvest of corn, of which about a third is used for ethanol.
- However, ethanol futures are trading at a $0.30 premium to gasoline futures, the second largest in the last five years; if the disparity persists, ethanol demand from fuel blenders could slip.
Nov. 21, 2014, 6:45 PM
- Ethanol and other biofuel groups are declaring victory, as the EPA today said a decision to finalize blending requirements for 2014 - first proposed more than a year ago - has been delayed.
- The delay gives hope to ethanol producers that the EPA will rethink how it proposes the annual biofuels levels; the draft 2014 biofuels levels were much lower than the ethanol industry wanted.
- Oil company lobbyists opposed to the law say the idea of setting a retroactive quota shows the EPA is incapable of managing the program; the American Fuel & Petrochemical Manufacturers, which represents energy companies, plans to sue the EPA for failing to issue the 2014 requirements.
- Ethanol stocks: ADM, GPRE, GEVO, MEOH, SZYM, REX, CDTI, REGI, FF, AMRS, ANDE
- Related refining stocks: VLO, HFC, MPC, TSO, WNR, ALJ, PSX, PBF, DK, NTI, ALDW
- Related coal stocks: BTU, WLT, CNX, ACI, ANR, YZC, ARLP, AHGP, NRP, PVG, PVA, OXF, CLD, WLB, SCOK
- Related solar stocks: JASO, SPWR, TSL, FSLR, CSIQ, YGE, EMKR, SOL, JKS, CSUN, SCTY, RGSE, SUNE, HSOL, DQ, ASTI, OTCQB:SOPW
- ETFs: XLE, ERX, VDE, OIH, ERY, DIG, DUG, IYE, FENY, PXJ, RYE, FXN, DDG, FUE, KOL, TAN
Nov. 19, 2014, 4:56 PM
- Archer Daniels Midland (NYSE:ADM) is suing Syngenta (NYSE:SYT) over rejections by China of a genetically modified corn variety not approved for import in the country.
- The lawsuit alleges that SYT commercialized the Agrisure Viptera corn variety without enacting "reasonable stewardship practices" to ensure the grain would not be shipped to markets that had not approved it.
- Grain exporter Cargill also has sued SYT over claims it illegally marketed its Agrisure Viptera corn seed before getting import approval from China.
Nov. 18, 2014, 12:19 PM| Nov. 18, 2014, 12:19 PM | Comment!
Nov. 12, 2014, 10:10 AM
Nov. 6, 2014, 1:48 AM| Nov. 6, 2014, 1:48 AM | Comment!
Nov. 5, 2014, 3:04 PM
Nov. 4, 2014, 10:04 AM
- Archer Daniels Midland (ADM +4.8%) drives higher after reporting better than expected Q2 earnings, led by operating profit growth in agricultural-services and corn-processing units.
- Corn processing operating earnings excluding one-time items almost doubled to $363M amid improved margins in ethanol and sweeteners. Bioproducts results more than doubled to $185M, driven by solid ethanol demand and margins through most of the quarter.
- Agricultural services operating profit increased to $315M from $102M a year earlier on improvements in international merchandising and transportation.
- The oilseeds processing segment's operating profit rose by $1M to $362M from a year earlier, with the impact from slower farmer selling in South America offset by stronger global softseed, soybean and biodiesel results.
- The company expects to repurchase up to 10M more shares by the end of 2014.
- ADM sold its global chocolate business to Cargill for $440M in September. Although the company entertained the idea of also selling its cocoa business, it didn’t find an acceptable price despite drawing interest.
Nov. 4, 2014, 7:05 AM
Oct. 14, 2014, 3:31 PM
- Global growth, foreign-exchange, oil, and small caps are the subject of every client inquiry, says David Kostin. His team's recommendation: Buy "American exceptionalism."
- In Kostin's view, U.S. economy and corporate fundamentals are still strong, with economic growth expected by Goldman economists to be 3.2% next year, the fastest expansion since 2005. Europe is expected to grow just 1%.
- What his team likes are those stocks of companies which have a high proportion of domestic sales, plus sectors like Consumer Staples (XLP -0.1%) and Discretionary (XLY +0.7%) which stand to benefit from lower oil prices (plunging again today).
- As for small caps (IWM +0.9%), Kostin is wary, noting downward earnings revisions have boosted small cap P/E ratios even as prices have declined.
- The list of S&P 500 names capturing two or more of Kostin's themes: GT, GM, PCLN, AMZN, CMCSA, LOW, DG, TSN, ADM, CVS, AVP, WAG, PXD, HAL, JPM, BAC, SCHW, PNC, MS, C, GNW, LNC, MET, THC, AET, UNH, ESRX, HUM, WLP, BIIB, GILD, DAL, CMI, FLR, CRM, JBL, MA, FB, MU, FSLR, VMC, MON, T.
Oct. 13, 2014, 1:00 PM
Sep. 19, 2014, 8:59 AM| Sep. 19, 2014, 8:59 AM | Comment!
Sep. 2, 2014, 12:02 PM
Aug. 27, 2014, 2:41 PM
- Rex American Resources (REX +12.8%) reaches new all-time highs after posting strong beats in Q2 earnings and revenues, as the company credits favorable market dynamics combined with the efficiency of its plants for leading to record Q2 net income.
- Says cash rose 45% from year-end 2013 to ~$152M, plant-level debt fell 18% to ~$62M, and debt-to-capital ratio was 16% from 21% as of Jan. 31.
- The upside Rex results appear to be boosting biofuel and ethanol related names: PEIX +5.6%, BIOF +4.9%, GPRE +2.6%, REGI +1.8%, ADM +1%.
ADM vs. ETF Alternatives
Archer-Daniels Midland Co is a processor of oilseeds, corn, wheat, cocoa, and other feedstuffs and is a manufacturer of vegetable oil and protein meal, corn sweeteners, flour, biodiesel, ethanol, and other value-added food and feed ingredients.
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