Stock of the Day
|
Monsanto (MON)
Monsanto's Sales Growth Boosts Profit 42%
While most American consumers and companies are struggling to deal with high energy prices, increasing food costs, and shaky market conditions, Monsanto has reported a huge boost in its latest quarterly earnings report. The seed and pesticide producer is uniquely poised to be able to benefit from many of the issues that are plaguing the status quo and, as conditions worsen, the company sees even greater opportunities on the horizon. In addition to the higher-than-expected quarterly profit, Monsanto has increased its full-year profit target. If so many in similar and related industries are finding it harder and harder to stay afloat, how has Monsanto managed to beat the odds?
|
| Daily Chart |
If you are not able to see the chart, your email client probably does not support javascript. To view it, please click here
|
| Stock Analysis |
Monsanto, a St. Louis-based company specializing in agricultural products such as herbicides and seed traits, is the world leader for the development of biotech crops. Perhaps best known for its Roundup weed-killer product, the company also supplies farmers in the U.S. with soybean, corn, and cotton seeds as well as sells corn seed in Europe and Africa, two regions where revenues been on the rise. These rising sales contributed to a 26 percent revenue boost during the company's recently completed fiscal third quarter. Sales increased from $2.84 billion to $3.6 billion and net income jumped 42 percent to $811 million from $570 million during the same period last year. The resulting earnings were $1.45 per share, compared with last year's earnings of $1.02 per share. Analysts' estimates, which on the average forecasted earnings of $1.36 per share on revenues of $3.7 billion, were surpassed, but the company's share price declined after the news was released.
|
Buy Monsanto for just $4
|
Monsanto executives are impressed with the results, which company president and CEO Hugh Grant has deemed, "remarkable." Grant went on to say that, "This strong growth sets up a solid foundation for our business to reach our target of more than doubling gross profit in 2012. Because we're both discovering and delivering innovative tools that can help increase productivity on farm, we offer an attractive solution to the farmer and their mission of meeting our world's growing food, feed and fuel needs." Monsanto has also revised its yearly guidance from the previous range of $3.15 to $3.25 earnings per share to earnings of $3.38 to $3.48 per share. Monsanto's future success does depend on the quality and appeal of the solutions it provides, but other factors based on current global events will feature heavily in the results from the coming quarters.
|
Monsanto's product offerings are designed to increase the production, and therefore profitability, of the farmers who use them. As commodities prices continue to rise along with the demand for products like corn and soybeans, Monsanto can count on their sales rising as well. Farmers can earn higher prices for these goods which is a pretty strong motivator to produce more. This additional output requires additional seeds and pesticides from Monsanto and similar suppliers. The boost in commodities prices has also allowed Monsanto to increase the prices they charge for their products because of the additional value they now provide. Price increases across the full spectrum of factors necessary for agricultural production, from fuel costs to seed costs, have trickled down to the consumer in the form of higher prices for the end product. The higher global demand for these agricultural products, however, will keep the demand for Monsanto's goods high, which bodes well for success in reaching the newly revised full year forecast.
|
Special Offer
|
| Buy MON for just $4
|
Profile |
Click here to view a detailed profile of Monsanto.
|
|
|
|
|
Back to newsletter list
