Archer Daniels & Vland Tie Up For Better Animal Feed Products

Archer Daniels Midland Company (NYSE:ADM) has signed a joint development agreement with Qingdao Vland Biotech Group Co., Ltd. — the leading biotech company in China. The move is expected to help develop new enzymes for animal feed applications. This will aid in improving animal nutrition and health. Also, both the companies should be able to commercialize the products that will be developed under this agreement.

Per the agreement, these companies will exchange enzyme-producing strains to develop feed enzymes. To support activities under the agreement, Archer Daniels plans to open a new U.S. enzyme research and development center in California. This new facility will be in addition to the company’s existing research center in Decatur, IL. Further, Vland’s plans to upgrade its Qingdao lab with modern facilities, in order to carry out research and development under the joint agreement.

Notably, this deal is a significant move toward enhancing Archer Daniels’ capacities in bioactives, enzymes as well as novel ingredients for the food, pharmaceutical and animal feed space. This will bolster the company’s foothold in the rapidly-growing enzymes business.

Archer Daniels’ Performance

Archer Daniels has been struggling against a tough operating environment in the Agricultural industry due to fluctuating commodity prices and oversupply. This has been largely denting the company’s top and bottom lines while keeping margins strained. Apparently, its sales lagged the Zacks Consensus Estimate for more than three years now, alongside delivering negative earnings surprise in eight of the last 10 quarters.

Consequently, this Zacks Rank #5 (Strong Sell) company’s shares have lost 6.7% in a year against the Consumer Staples sector’s growth of 14.6%.

We expect strategic deals and agreements like the one mentioned above might provide cushion and help fuel the company’s growth.

Looking for Solid Picks in the Same Space, Check These

Some better-ranked stocks in the broader Consumer Staples sector include Sysco Corporation (NYSE:SYY) , Nomad Foods Limited (NYSE:NOMD) and United Natural Foods, Inc. (NASDAQ:UNFI) .

Sysco with a long-term earnings growth rate of 9% has delivered an average positive earnings surprise of 2.6% in the trailing four quarters. Also, the stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Nomad Foods carries a Zacks Rank #2 (Buy) and has pulled off an average positive earnings surprise of 26.1% in the last reported quarter.

United Natural Foods, a Zacks Rank #2 stock, has a long-term earnings growth rate of 6.2%. Also, the company has delivered an average positive earnings surprise of 2.3% in the trailing four quarters.

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