ADM - Embedded Expectations Analysis - 2020 07 10
Archer-Daniels-Midland Company (ADM:USA) currently trades at a discount to UAFRS-based (Uniform) assets, with a 0.9x Uniform P/B. At these levels, the market has muted expectations for the firm, and management may be concerned about their margins, business transformation, and international operationsSpecifically, management may lack confidence in their ability to improve their margins and sustain origination volume and margin growth in Brazil and increased activity in China. Moreover, they may be concerned about the progress of China's reopening, general market headwinds in Brazil, and biodiesel demand pressures in Europe. In addition, they may have concerns about the sustainability of strong meat demand, the continued decline of the ethanol industry, and the recovery of Neovia's markets. Furthermore, management may be exaggerating the progress of their business transformation, the potential of their new products to bring new orders, and their plants' performance amidst the quarantine. Finally, they may be overstating people's focus on nutrition as a result of the coronavirus
Archer Daniels Midland is a human and animal nutrition and an agricultural origination and processing company. The company has three segments: Ag Services and Oilseeds, which includes activities related to the origination, merchandising, transportation, and storage of agricultural raw materials, and the crushing and further processing of oilseeds such as soybeans and soft seeds into vegetable oils and protein meals; Carbohydrate Solutions, which is engaged in corn and wheat wet and dry milling and other activities; and Nutrition, which engages in the manufacturing, sale, and distribution of an array of products including plant-based proteins, natural flavor ingredients, and flavor systems.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.