Archer Daniels (ADM) To Post Q4 Earnings: What's In Store?

Archer Daniels Midland Company (NYSE:ADM) is slated to report fourth-quarter 2019 results on Jan 29, after market close. The company delivered a positive earnings surprise of 14.9% in the last reported quarter. However, its earnings underperformed the Zacks Consensus Estimate by 4.2%, on average, in the trailing four quarters.

The Zacks Consensus Estimate for fourth-quarter earnings has moved south by a penny to 74 cents over the past seven days. This suggests a decline of 15.9% from the year-ago period’s reported figure. Further, the consensus mark for revenues is pegged at $15,080 million, indicating a decrease of 5.4% from the figure reported in the year-ago quarter.

Key Factors to Note

Archer Daniels has been grappling with softness at Ag Services and Oilseeds segment. During the last earnings call, management guided a considerable year-over-year decline at Ag Services and Oilseeds in the fourth quarter. However, the performance is expected to show sequential improvement.

Archer Daniels Midland Company Price, Consensus and EPS Surprise

Also, the company has been witnessing weak performance across its Carbohydrate Solutions segment. Management expects continued challenges in this segment in the fourth quarter. These weaknesses are weighing on the company’s adjusted segment operating profit. All these factors along with rising cost and high debt level are likely to have negatively impacted its performance in the quarter under review.

Nevertheless, Archer Daniels’ three strategic pillars — optimize the core, drive efficiency and grow strategically — as well as focus on Project Readiness bode well. The company’s Readiness goals of driving business improvement, standardizing functions and enriching consumers’ experience are well on track, and likely to have boosted fourth-quarter’s bottom line. Moreover, its Nutrition segment’s performance has been strong.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Archer Daniels this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Archer Daniels carries a Zacks Rank #3, its Earnings ESP of -8.11% makes surprise prediction difficult.

Stocks With Favorable Combinations

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Darling Ingredients Inc. (NYSE:DAR) currently has an Earnings ESP of +6.38% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hostess Brands, Inc. (NASDAQ:TWNK) presently has an Earnings ESP of +4.62% and a Zacks Rank #1.

Altria Group, Inc. (NYSE:MO) currently has an Earnings ESP of +0.29% and a Zacks Rank #3.

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