Archer Daniels to Report Q4 Earnings: What Surprise Awaits Investors?

Core Viewpoint - Archer Daniels Midland Company (ADM) is expected to report a decline in both revenues and earnings for the fourth quarter of 2024, with significant challenges in its Ag Services & Oilseeds segment impacting overall performance [1][2][3]. Revenue and Earnings Estimates - The Zacks Consensus Estimate for ADM's revenues is $21.9 billion, reflecting a decrease of 4.6% year-over-year [1]. - The consensus estimate for earnings per share is $1.07, indicating a decline of over 21% from the previous year's quarter [2]. Segment Performance - The Ag Services & Oilseeds segment is facing underperformance, with operating profit negatively impacted by weak farmer selling and increased logistics costs [3]. - The Crushing sub-segment is expected to be affected by high canola seed prices, despite strong soybean crush margins in EMEA [4]. - The Refined Products & Other sub-segment is anticipated to experience softness in North America due to increased imports of used cooking oil and higher pretreatment capacity, leading to lower refining and biodiesel margins [4]. Management Insights - Management has indicated expectations of lower year-over-year segment operating profit in Ag Services & Oilseeds for Q4 2024, with weak margins in Crushing and Refined Products & Other offsetting improvements in Ag Services [5]. - The adjusted operating profit estimate for Ag Services & Oilseeds is $630 million, with revenues pegged at $17.2 billion [6]. Nutrition Segment Outlook - ADM is focusing on optimizing its organizational and operational structure in the Human and Animal Nutrition segments, which is expected to yield cost benefits [7]. - The consensus estimate for operating profit in the Nutrition segment is $85 million, with revenues expected to be $1.7 billion [8]. Strategic Initiatives - The company is pursuing additional margin opportunities through digital technologies, partnerships, and its BioSolutions platform, with a goal of achieving $500 million in cost savings [9]. Valuation and Market Performance - ADM is trading at a forward 12-month price-to-earnings ratio of 10.93, below its five-year high and the industry average, indicating attractive valuation for investors [11]. - The stock has declined 19.1% over the last six months, contrasting with a 1.0% fall in the industry [12].