Commodities & Metals

What to Look for in Monsanto Earnings

Chris Lange

Published: April 5, 2016 3:55 pm

Last Updated: March 13, 2020 10:25 pm

Monsanto Co. (NYSE: MON) is set to share its latest quarterly earnings before the markets open on Wednesday. The consensus estimates from Thomson Reuters call for $2.44 in earnings per share (EPS) and $4.76 billion in revenue. The same period from the previous year had $2.89 in EPS on $5.20 billion in revenue.

The company provides agricultural products for farmers worldwide. It operates in two segments: Seeds and Genomics, and Agricultural Productivity. Monsanto has met with controversy in recent years as many people protest the use and development of genetically modified organisms (GMOs).

While agriculture is weak at the moment, low prices lead to good income picks to help out with what may be a long wait. Long-term population trends are not declining, and prices eventually must rise. In the meantime, there are some really attractive value plays in the sector.

Recently, the U.S. Securities and Exchange Commission (SEC) recently announced that Monsanto has agreed to pay an $80 million penalty and retain an independent compliance consultant to settle charges that it violated accounting rules and misstated company earnings as it pertained to its flagship product Roundup. At the same time, three accounting and sales executives also agreed to pay penalties to settle charges against them. Note that this company has a total market cap of $38 billion.

A few analysts weighed in on Monsanto prior to the earnings report:

• Sanford Bernstein has a Sell rating with an $80 price target.
• Citigroup downgraded to a Neutral rating from Buy and lowered its price target to $95 from $105.
• Goldman Sachs downgraded to a Sell rating from Neutral and lowered its price target to $84 from $86.

So far in 2016 Monsanto has underperformed the broad markets with the stock down 11% year to date. Over the past 52-weeks the stock is down 24%.

Shares of Monsanto were last trading at $86.71. That was within a 52-week trading range of $81.22 to $123.82. The consensus price target is $99.84.