Monsanto Company (MON) Q2 Earnings Miss Estimates, Up Y/Y

Monsanto Company (NYSE:MON) reported weaker-than-expected results for second-quarter fiscal 2018 (ended February 2018).

Earnings

Quarterly adjusted earnings from ongoing business came in at $3.22 per share, missing the Zacks Consensus Estimate of $3.38. However, the bottom line came in higher than the year-ago tally of $3.19 per share.

Revenues

During the reported quarter, Monsanto generated revenues of $5,019 million, edging down 1.1% year over year. The top line also missed the Zacks Consensus Estimate of $5,489 million.

On a segmental basis, revenues from Seeds and Genomics dipped 2.3% year over year to $4,088 million. However, revenues from Agricultural Productivity were up 4.8% year over year to $931 million.

Cost & Margins

Monsanto’s cost of sales dropped 3.3% year over year to $2,053 million during the fiscal second quarter. Gross profit margin expanded 90 basis points (bps) to 59.1% during the quarter.

Operating expenses during the quarter came in at $1,070 million, down 1.7% year over year. Interest expenses were $105 million, up 2.9% year over year.

Balance Sheet and Cash Flow

Exiting the fiscal second quarter, Monsanto had cash and cash equivalents of $2,409 million, higher than $1,856 million recorded at the end of fiscal 2017. Long-term debt was $6,635 million, as against $7,254 million recorded on Aug 31, 2017.

In the first half of fiscal 2018, Monsanto generated net cash of 1,630 million from operating activities compared with $1,537 million recorded in the year-ago period. Capital spending flared up 21.7% year over year to $661 million.

Outlook

Monsanto believes improved glyphosate pricing and elevated demand for innovative crop-yield enhancing solutions, such as Intacta RR2 PRO soybeans, will boost its near-term results.

This Zacks Rank #3 (Hold) company expects that Bayer (DE:BAYGN) AG’s (OTC:BAYRY) buyout deal will open up a number of opportunities for its business.

Bayer’s distinct crop-protection portfolio, when combined with Monsanto’s popular Climate FieldView and Seeds & Traits platform, is anticipated to give rise to a highly competitive seeds traits and agricultural chemicals behemoth in the industry.

The largest all-cash deal ($66 billion), which awaits regulatory approvals, is anticipated to close by the end of second quarter of calendar-year 2018.

Stocks to Consider

Two better-ranked stocks in the Zacks Basic Materials sector are listed below:

Cabot Corporation (NYSE:CBT) sports a Zacks Rank of 1 (Strong Buy). The company has pulled off an average positive earnings surprise of 3.68% in the last four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) , which carries a Zacks Rank of 2 (Buy), recorded an average positive earnings surprise of 0.81% during the same time frame.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>