Archer Daniels to Report Q1 Earnings: What Should Investors Expect?

Archer Daniels Midland Company ADM is slated to report first-quarter 2025 results on May 6, before market open. The company is likely to report bottom and top-line declines when it posts the quarterly results.

The Zacks Consensus Estimate for the company’s earnings is pegged at 69 cents per share, which indicates a plunge of 52.7% from the year-ago quarter’s figure. The consensus mark has fallen 2.8% in the past 30 days. For revenues, the consensus mark is pegged at $20.7 billion, implying a 5.3% dip from the year-ago quarter’s figure.

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In the last reported quarter, the company delivered an earnings surprise of 6.5%. Its earnings missed the Zacks Consensus Estimate by 3.8%, on average, in the trailing four quarters.

Key Factors to Influence ADM’s Upcoming Results

Archer Daniels is grappling with tough market conditions. One of the key factors contributing to its underperformance is the sluggishness in its Ag Services & Oilseeds segment. The company has been grappling with numerous headwinds in the agriculture cycle, with few market dislocations and increased cost inflation. Also, depressed vegetable oil demand and low prices owing to higher market supply and uncertainty are likely to have hurt the Crushing subsegment.

In Refined Products and Other, margins have been pressurized by the increased supply of low-carbon intensity feedstock. Weak demand from food customers in North America has also been negatively affecting refining margins on a year-over-year basis. Several market and geopolitical challenges, with ongoing price weakness of main feed ration commodities, are acting as deterrents. The feed additives market has been adversely affected by volatility in vitamins due to supply disruptions. 

All such aforesaid factors, along with potential risks and uncertainties, and other operational challenges, are likely to affect ADM’s results in the to-be-reported quarter. In Carbohydrate Solutions, for the first quarter, ADM had anticipated segment operating profit to below by nearly 5-15% compared with the prior-year period.

For the Ag Services & Oilseeds segment, management had expected segment operating profits to be down approximately 50% in the first quarter of 2025, due to decreases in crushing and RPO. For crushing, it anticipates soybean and canola execution crush margins to be lower year over year. The Zacks Consensus Estimate for the Ag Services & Oilseeds segment is pegged at $16.1 billion for revenues and $454 million for the adjusted segment operating profit. These estimates reflect a year-over-year decline of 6.4% and 47.5%, respectively.

However, ADM has been focused on optimizing the organizational and operational structure across Human and Animal Nutrition. The Zacks Consensus Estimate for the Nutrition segment’s revenues is pegged at $1.9 billion, up 0.5% year over year. Management had anticipated Nutrition’s operating profit to be nearly flat sequentially in the first quarter. The company has also been actively managing productivity and innovation as well as aligning work to the interconnected trends in food security, health and wellbeing.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Archer Daniels this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Archer Daniels currently has an Earnings ESP of +6.57% and a Zacks Rank #4 (Sell).

Valuation Picture

From a valuation perspective, Archer Daniels offers an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 11.01x, which is below the five-year high of 18.93x and the Agriculture - Operations industry’s average of 14.14x, the stock offers compelling value for investors seeking exposure to the sector.

The recent market movements show that ADM’s shares have lost 3.5% in the past three months compared with the industry's 7.2% decline.

Stocks With the Favorable Combination

Here are some companies, which according to our model, have the right combination of elements to beat on earnings this reporting cycle.

Celsius Holdings, Inc. CELH currently has an Earnings ESP of +10.51% and a Zacks Rank of 3. The Zacks Consensus Estimate for first-quarter 2025 earnings per share (EPS) is pegged at 20 cents, which implies a 25.9% year-over-year decrease. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Celsius Holdings’ quarterly revenues is pegged at $344.1 million, which indicates a decline of 3.3% from the figure reported in the prior-year quarter. CELH has a trailing negative four-quarter earnings surprise of roughly 4%, on average.

Ollie's Bargain Outlet Holdings, Inc. OLLI currently has an Earnings ESP of +1.64% and a Zacks Rank of 3. The Zacks Consensus Estimate for first-quarter fiscal 2025 EPS is pegged at 70 cents, which implies a 4.1% decrease year over year.

The consensus mark for Ollie's Bargain’s quarterly revenues is pegged at $564.2 million, which indicates growth of 10.9% from the figure reported in the prior-year quarter. OLLI delivered a trailing four-quarter earnings surprise of 3.3%, on average.

The J. M. Smucker Company SJM currently has an Earnings ESP of +4.52% and a Zacks Rank of 3. The consensus estimate for J. M. Smucker’s quarterly revenues is pegged at $2.2 billion, which indicates a decline of 0.9% from the figure reported in the prior-year quarter. SJM delivered a trailing four-quarter earnings surprise of 11.7%, on average.

The Zacks Consensus Estimate for fourth-quarter fiscal 2025 EPS is pegged at $2.25, which implies a 15.4% decrease year over year.

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

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