How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you'd invested in Archer Daniels Midland (ADM) ten years ago? It may not have been easy to hold on to ADM for all that time, but if you did, how much would your investment be worth today?
Archer Daniels Midland's Business In-Depth
With that in mind, let's take a look at Archer Daniels Midland's main business drivers.
Incorporated in Delaware in 1923, Archer Daniels Midland Company is successor to the Daniels Linseed Co. Founded in 1902, this Illinois-based company is one of the leading producers of food and beverage ingredients as well as goods made from various agricultural products.
The company processes oilseeds, corn, wheat, cocoa and other feedstuffs. Moreover, it engages in the manufacturing, sale, and distribution of products like natural flavor ingredients, flavor systems, natural colors, proteins, emulsifiers, soluble fiber, polyols, hydrocolloids, natural health and nutrition products as well as other specialty food and feed ingredients.
Archer Daniels also has a worldwide grain elevator and transportation network for procurement, storage, cleansing and transportation of agricultural commodities. Archer Daniels also makes important investments in joint ventures to aid growth.
Starting first-quarter 2018, the company realigned its business segments to reflect a new operating structure. It currently reports through the Carbohydrate Solutions, Nutrition, Oilseeds and Origination segments.
On May 29, 2019, Archer Daniels created a new business unit, namely, Ag Services & Oilseeds. The unit combined the company’s Origination and Oilseed operations in a single reporting structure which came into operations from Jul 1, 2019.
The Ag Services & Oilseeds (78.6% of 2021 total revenues) includes the Agricultural Services business, excluding Milling and engages in originating, merchandising, crushing and processing oilseeds.
The Carbohydrate Solutions segment (13%) comprises the Corn and Milling operations.
Nutrition segment (7.9%) includes Animal Nutrition and Bioactives businesses as well as the Wild Flavors & Specialty Ingredients segment (WFSI).
The Other segment (0.4%) primarily includes the company’s financial business units. However, it makes negligible contribution to the company’s revenues.
Anyone can invest, but building a successful investment portfolio requires research, patience, and a little bit of risk. So, if you had invested in Archer Daniels Midland ten years ago, you're likely feeling pretty good about your investment today.
A $1000 investment made in August 2012 would be worth $3,222.82, or a gain of 222.28%, as of August 11, 2022, according to our calculations. This return excludes dividends but includes price appreciation.
Compare this to the S&P 500's rally of 199.48% and gold's return of 6.11% over the same time frame.
Looking ahead, analysts are expecting more upside for ADM.
Shares of Archer Daniels have outpaced the industry in a year's time on robust earnings surprise trend, which continued in second-quarter 2022. Both top and bottom lines beat estimates and grew year over year. This marked the 12th straight quarter of an earnings surprise and the 11th straight quarter of adjusted operating profit growth. Results gained from solid demand, improved productivity and product innovations. Persistent growth in the Nutrition segment, driven by significant gains in the Human and Animal Nutrition units, remained key growth drivers. It expects the nutrition segment operating profit growth of 20% in 2022. Q3 performance is likely to be higher year over year, driven by the continued demand and favorable ethanol blending economics. However, rising SG&A costs act as a deterrent. Higher inflation also remain concerning.
The stock is up 15.01% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 5 higher, for fiscal 2022. The consensus estimate has moved up as well.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Archer Daniels Midland Company (ADM) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research