Is Archer Daniels Midland Still a Safe Play?

January 03, 2013

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E = Equity to Debt Ratio Is Normal

The debt-to-equity ratio and balance sheet are both normal. There is no reason for excitement or worry.

	Debt-To-Equity	Cash	Long-Term Debt
ADM	0.57	$5.52 Billion	$6.82 Billion
BG	0.66	$690.00 Million	$7.93 Billion
INGR	0.72	$532.00 Million	$1.77 Billion

T = Technicals on the Stock Chart Are Mixed

Archer Daniels Midland has underperformed Bunge Limited (NYSE:BG) and Ingredion Incorporated (INGR) over the past three years.

	1 Month	Year-To-Date	1 Year	3 Year
ADM	8.73%	5.99%	4.04%	-0.93%
BG	1.05%	1.71%	31.32%	21.29%
INGR	3.14%	22.04%	4.83%	27.40%

At $28.51, Archer Daniels Midland is currently trading above its 50-day and 100-day SMA, and slightly below its 200-day SMA.

50-Day SMA	26.84
100-Day SMA	27.00
200-Day SMA	28.65

E = Earnings Have Been Inconsistent

Archer Daniels Midland has had no problem increasing revenue, especially over the past three years, but earnings growth has left a lot to be desired.

	2008	2009	2010	2011	2012
Revenue ($)in billions	69.82	69.21	61.68	80.68	89.04
Diluted EPS ($)	2.75	2.62	3.00	3.13	1.84

When we look at last quarter on a YoY basis, we see a decrease in revenue, and a significant decrease in earnings. It’s becoming evident that Archer Daniels Midland is having an increasingly difficult time with the bottom line.

	9/2011	12/2011	3/2012	6/2012	9/2012
Revenue ($)in billions	21.90	23.31	21.16	22.68	21.81
Diluted EPS ($)	0.68	0.12	0.60	0.44	0.28

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