Some flavor on earnings... for my eyes, excluding the tax benefit of 9 cents they matched analysts estimates. Some drop in full year guidance but the company usually under promises, and over delivers. At $4.50 it is well under 20x forward earnings which for this sort of stability I find a relative value... most other sectors or stocks you are dart throwing and praying that the earnings guidance has any value. But for now, charts are everything.
Reuters
- Monsanto Co (MON), the world's biggest seed company, posted better-than-expected profit on Thursday as revenue increased in its key corn and soybean seed businesses and it benefited from a low tax rate. Chief Executive Hugh Grant said the company saw "unprecedented economic uncertainty globally," but still enjoyed demand from farmers for its seed technology.
- Monsanto said net income fell to $1.09 billion, or $1.97 a share, in the second quarter ended on Feb. 28 from $1.13 billion, or $2.02 a share, a year earlier. The results include a charge in the latest quarter from the company's acquisition of a sugar cane breeding and technology company in Brazil and a year-earlier gain. Excluding items, earnings rose to $2.16 a share from $1.77. Analysts on average were expecting $2.07. Results included a tax benefit of about 9 cents a share.
- Net sales rose 8 percent to $4 billion.
- Soleil Securities analyst Mark Gulley said the company benefited from several variables, including the tax rate, but pure fundamentals were strong. "Corn and soy remain the foundation of the company, and that continues to do well," said Gulley, who has a "buy" rating on the shares.
- Quarterly revenue jumped in both in the U.S. branded corn seed and traits business and U.S. soybean seed and traits business, although there were fewer planted acres for corn in Brazil because of drought conditions.
- Seed and genomics sales rose 20 percent to $3 billion, while sales of Roundup and other herbicides dropped 21 percent. Last year, U.S. volume of the Roundup herbicide was up in the second quarter ahead of an anticipated price increase, but this year sales returned to more historical patterns, company officials said. Monsanto reported a 19 percent jump in corn seed sales for the quarter, and a 35 percent jump in soybean sales.
- This year will probably mark the peak for Monsanto's Roundup business, executives reiterated, with revenue and profit increasingly driven by seeds and traits.
- Monsanto forecast single-digit percentage earnings growth for the third quarter and a loss for the fourth quarter.
- The company said it expected full-year net income of $4.23 to $4.33 per share. Excluding items, it continued to forecast $4.40 to $4.50, while analysts were expecting $4.72.
