Earnings Preview: Monsanto

| About: Monsanto Company (MON)
This article is now exclusive for PRO subscribers.

Monsanto Company (NYSE:MON), together with its subsidiaries, provides agricultural products for farmers in the United States and internationally. It operates in two segments, Seeds and Genomics, and Agricultural Productivity. The Seeds and Genomics segment produces corn, soybean, canola and cotton seeds, as well as vegetable seeds, including tomato, pepper, melon, cucumber, pumpkin, squash, beans, broccoli, onions and lettuce seeds.

It is scheduled to report its Q3 2012 results on June 27, 2012, before the market opens.

Recent EPS Actuals vs. Estimates

The company has met or beaten analysts' estimates in the last four quarters. In the last quarter it reported $2.28 EPS, beating analyst estimates of $2.12.

The consensus EPS is $1.55 based on 18 analysts' estimates, up from $1.26 a year ago. Revenue estimates are $4.00B, up from $3.59B a year ago. The median target price by analysts for the stock is $90.00.

Average recommendation: Overweight

Source: Marketwatch

Analyst Upgrades and Downgrades

  • On May 16, 2012, Canaccord Adams upgraded the company from Hold to Strong Buy.
  • On April 5, 2012, Deutsche Bank reiterated Buy rating for the company.

Key Metrics

  • Market Cap: 41.49B
  • 52-week trading range: 58.89 - 83.95
  • Trailing P/E: 21.98
  • Forward P/E: 18.43
  • Price/Sales: 3.18
  • Price/Book: 3.46
  • PEG Ratio: 1.82
  • Total Debt: 2.23B
  • Annual dividend yield: 1.50%
  • Return on Equity: 16.77%
  • Return on Assets: 9.29%

Latest Developments

  • On June 6, 2012, Monsanto Company announced that its Board of Directors has approved a new three-year share repurchase program and declared a quarterly dividend. Monsanto's board authorized a new share repurchase program, effective July 1, 2012, for up to $1 billion of Monsanto's common stock over a three-year period.
  • On May 30, 2012, Monsanto Company announced that the Company is raising fiscal 2012 earnings per share (EPS) guidance to the range of $3.65 to $3.70 on an ongoing basis and $3.73 to $3.78 on an as-reported basis.
  • On April 4, 2012, Monsanto Company announced that it has raised the ongoing EPS expectation above the high end of the initial guidance to $3.49-$3.54 per share for fiscal 2012.
  • On February 14, 2012, Reuters reported that Monsanto Company will appeal a French court ruling that found it responsible for the poisoning of a farmer who inhaled a weedkiller in what is the first such case to reach court in France.
  • On January 5, 2012, Monsanto Company announced that for fiscal 2012, it expects ongoing earnings per share of $3.39-$3.44.


Monsanto Co. operates in Agricultural Chemicals industry. The company could be compared to Archer Daniels Midland Company (NYSE:ADM) and Bunge Limited (NYSE:BG). Below is the table comparison of the most important ratios between these companies and the industry.

Below is the chart comparison with the stock price changes as a percentage for the selected companies and S&P 500 index for the last one year period.

MON Chart

MON data by YCharts

Competitors' Latest Development

  • On June 13, 2012, Bunge Limited announced that Bunge Limited Finance Corp., its wholly owned finance subsidiary, has priced a public offering of $600 million aggregate principal amount of 3.20% senior notes due 2017.
  • On May 3, 2012, Archer Daniels Midland Co announced that its Board of Directors approved a change to calendar-year financial reporting, effective Jan. 1, 2013. Historically, ADM has operated on a June 30 fiscal year-end, primarily driven by the U.S. crop year.
  • On April 16, 2012, Bunge Limited and Climate Change Capital Limited (NYSE:CCC) announced that Bunge has completed its previously announced acquisition of 100% of Climate Change Capital Group Limited (CCCG), the parent company of CCC.
  • On April 4, 2012, Bunge Limited announced that it has purchased substantially all of the assets, including the patent portfolio, of MCN BioProducts Inc., a privately-held Canadian technology company.
  • On April 3, 2012, Solazyme Inc and Bunge Global Innovation LLC (Bunge), a wholly-owned subsidiary of Bunge Limited announced that they and other Bunge subsidiaries have signed definitive agreements forming a Joint Venture (JV) to build, own and operate a commercial-scale renewable tailored oils production facility adjacent to Bunge's Moema sugarcane mill in Brazil.
  • On February 22, 2012, Bunge Limited announced that it has agreed to acquire Climate Change Capital Group Limited (CCCG). The transaction was approved by the U.K.'s Financial Services Authority (FSA) on February 20, 2012, and CCCG has obtained the required shareholder approvals to proceed.
  • On February 22, 2012, Archer-Daniels-Midland Co and Wilmar International Limited announced the signing of a memorandum of understanding, indicating their intent to work together in a strategic partnership in global fertilizer purchasing and distribution, global ocean freight operations, and tropical oils refining in Europe.
  • On February 10, 2012, Bunge India Private Limited, a wholly owned subsidiary of Bunge Limited and Amrit Banaspati Company Limited announced that Bunge has completed the previously announced acquisition of the edible oils and fats business of Amrit Banaspati.
  • On February 2, 2012, Archer-Daniels-Midland Co announced that the Board of Directors declared a cash dividend of $0.175 per share on the Company's common stock payable March 8, 2012, to Stockholders of record February 16, 2012.
  • On January 11, 2012, Archer Daniels Midland Company announced that it will streamline its organizational structure, reducing its global workforce to enhance the cost structure of the company.
  • On December 15, 2011, Archer Daniels Midland Company announced that the Polish Office of Competition and Consumer Protection has approved the purchase of Elstar Oils S.A., by Archer Daniels Midland Nederland B.V., giving ADM operational control of the company.

Technical Insight

The company is currently trading in a range environment. It is close the top of the range and is trading above 20, 50 and 200 SMA on the daily chart. Looking from the broader weekly perspective, it is in an uptrend and has recently (in the middle of May) tested the bottom of it.

Sources: Yahoo Finance, Google Finance, Marketwatch, Finviz, Reuters.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.