Will Archer Daniels' Strategic Moves & Cost Savings Aid Growth?

Archer Daniels Midland Company ADM is focused on optimizing the organizational and operational structure across Human and Animal Nutrition. The company is actively managing productivity and innovation as well as aligning work to the interconnected trends in food security, health and wellbeing. ADM has been strengthening its internal controls, driving execution, improving operational performance and reducing costs while simplifying its portfolio to boost core competencies and unlocking higher capital to drive value.

Archer Daniels is smoothly progressing on its key strategic pillars, including optimize, drive and growth. Under the optimize pillar, the company had expanded alternative protein capabilities and starch production. As part of its optimizing pillar, it continues to adapt to consumers’ changing nutritional preferences. Under its drive pillar, the company is adapting its organizational structure to meet operational excellence. It is focused on expanding its footprint in fast-growing alternative protein. 

Archer Daniel has been seeing a recovery in its Nutrition business for a while. In second-quarter 2025, Nutrition’s revenues rose 4.5% year over year, while the segment’s operating profit increased 5% from the same period last year. Strong growth in Flavors and Animal Nutrition portfolios drove the upside. Within this segment, Flavors saw profit growth due to higher margins and a modest increase in volumes, particularly in North America. ADM has been addressing demand fulfillment issues and leveraging the innovation capabilities in Flavors, which is contributing to operating profit.

Going into 2025 and beyond, the company looks forward to making targeted investments in a portion of the portfolio to bolster growth and differentiation, including the plant digitization, operating leverage, higher marketing volumes in targeted markets, building the decarbonization solution portfolio and making evolution of the biofuels and energy sector. 

The company is likely to make investments in areas like biosolutions, destination marketing and biotics. ADM’s targeted actions are likely to produce $500-$750 million cost savings in the next three-five years. ADM is focused on operational improvements and accelerating cost savings. Such initiatives are likely to deliver growth ahead.

ADM’s Price Performance, Valuation and Estimates

Archer Daniels shares have gained 24.5% year to date compared with the industry’s 6.7% growth.

From a valuation standpoint, ADM trades at a forward price-to-earnings ratio of 13.5X compared with the industry’s average of 13.84X.

The Zacks Consensus Estimate for ADM’s 2025 earnings per share (EPS) indicates a year-over-year decline of 15.8% while that of 2026 shows growth of 21.3%. The company’s EPS estimate for 2025 and 2026 has been stable in the past 30 days.

Archer Daniels currently carries a Zacks Rank #3 (Hold).

Stocks to Consider in the Consumer Staples Space

United Natural Foods UNFI is a key distributor of natural, organic and specialty food and non-food products. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. 

The Zacks Consensus Estimate for United Natural Foods' current financial-year sales and earnings indicates growth of 2.4% and 167.6%, respectively, from the prior-year levels. UNFI delivered a trailing four-quarter earnings surprise of 416.2%, on average.

Celsius Holdings, Inc. CELH, which specializes in nutritional functional foods, beverages and dietary supplements, starches and nutrition ingredients, currently sports a Zacks Rank of 1.

The Zacks Consensus Estimate for Celsius’ current financial-year earnings is expected to rise 54.3% from the corresponding year-ago reported figure. CELH delivered a trailing four-quarter earnings surprise of 5.4%, on average.

Post Holdings POST, which is a consumer-packaged goods holding company, currently carries a Zacks Rank #2 (Buy). POST delivered a trailing four-quarter earnings surprise of 21.4%, on average. 

The Zacks Consensus Estimate for Post Holdings’ current financial-year earnings indicates growth of 11% from the year-ago number. 

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

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research