Critical Analysis: Archer-Daniels-Midland (ADM) vs. Its Rivals

Archer-Daniels-Midland (NYSE: ADM) is one of 50 publicly-traded companies in the “Food Processing” industry, but how does it compare to its competitors? We will compare Archer-Daniels-Midland to related companies based on the strength of its analyst recommendations, dividends, profitability, institutional ownership, valuation, risk and earnings.

Earnings and Valuation

This table compares Archer-Daniels-Midland and its competitors gross revenue, earnings per share and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Archer-Daniels-Midland $62.26 billion $2.70 billion 18.19
Archer-Daniels-Midland Competitors $8.38 billion $1.05 billion 22.36

Archer-Daniels-Midland has higher revenue and earnings than its competitors. Archer-Daniels-Midland is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Dividends

Archer-Daniels-Midland pays an annual dividend of $1.28 per share and has a dividend yield of 3.0%. Archer-Daniels-Midland pays out 53.8% of its earnings in the form of a dividend. As a group, “Food Processing” companies pay a dividend yield of 2.6% and pay out 60.1% of their earnings in the form of a dividend. Archer-Daniels-Midland has raised its dividend for 41 consecutive years. Archer-Daniels-Midland is clearly a better dividend stock than its competitors, given its higher yield and lower payout ratio.

Profitability

This table compares Archer-Daniels-Midland and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Archer-Daniels-Midland 2.22% 8.40% 3.71%
Archer-Daniels-Midland Competitors 4.08% 11.36% 4.77%

Institutional & Insider Ownership

72.9% of Archer-Daniels-Midland shares are held by institutional investors. Comparatively, 63.6% of shares of all “Food Processing” companies are held by institutional investors. 2.7% of Archer-Daniels-Midland shares are held by insiders. Comparatively, 12.2% of shares of all “Food Processing” companies are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Volatility & Risk

Archer-Daniels-Midland has a beta of 1.12, indicating that its stock price is 12% more volatile than the S&P 500. Comparatively, Archer-Daniels-Midland’s competitors have a beta of 0.72, indicating that their average stock price is 28% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations for Archer-Daniels-Midland and its competitors, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Archer-Daniels-Midland 1 6 1 0 2.00
Archer-Daniels-Midland Competitors 265 1500 1857 53 2.46

Archer-Daniels-Midland currently has a consensus target price of $43.00, indicating a potential downside of 0.67%. As a group, “Food Processing” companies have a potential downside of 1.70%. Given Archer-Daniels-Midland’s higher possible upside, research analysts plainly believe Archer-Daniels-Midland is more favorable than its competitors.

Summary

Archer-Daniels-Midland competitors beat Archer-Daniels-Midland on 8 of the 15 factors compared.

Archer-Daniels-Midland Company Profile

Archer-Daniels-Midland Company is a processor of oilseeds, corn, wheat, cocoa and other agricultural commodities. The Company manufactures protein meal, vegetable oil, corn sweeteners, flour, biodiesel, ethanol, and other food and feed ingredients. Its segments include Agricultural Services, which utilizes its United States grain elevator, global transportation network and port operations to buy, store, clean and transport agricultural commodities, such as oilseeds, wheat, milo, oats, rice and barley, and resells these commodities primarily as food and feed ingredients and as raw materials for the agricultural processing industry; Corn Processing, which is engaged in corn wet milling and dry milling activities; Oilseeds Processing, which includes global activities related to the origination, merchandising, crushing and further processing of oilseeds; Wild Flavors and Specialty Ingredients products, which include flavors, sweeteners and health ingredients; Other, and Corporate.

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