ADM Stock Drops After Disappointing Q4 Earnings Report

Shares of Archer-Daniels-Midland (ADM) fell 2.8% following a disappointing fourth-quarter earnings report. Revenue and earnings per share missed estimates, dampening investor sentiment.

Date: 05-02-2025

AI Rating: 4

Overview of Earnings Report

Archer-Daniels-Midland (ADM) reported a decline in revenue falling 6.5% to $21.5 billion, which missed expectations of $22.77 billion. The decrease in revenue is a concerning indicator for investors, suggesting market conditions are softer than anticipated, leading to a negative outlook on future performance.

Earnings Per Share (EPS)

For the quarter, adjusted earnings per share dropped from $1.36 to $1.14, slightly below the consensus estimate of $1.15. This performance in EPS will likely lead to concerns among investors regarding the company's profitability moving forward.

Revenue Growth

The negative revenue growth impacts not only short-term strategy but also long-term investor confidence, as falling revenue signifies potential challenges in maintaining operational performance amidst fluctuating market conditions.

Profit Margins

Gross profit saw a significant decline of 22% to $1.36 billion, with gross margins decreasing from 7.6% to 6.3%. The deterioration of gross margins further indicates operational inefficiencies that need to be managed to retain or improve profitability.

Future Guidance

CEO Juan Luciano noted that given the softer market conditions and policy uncertainties expected in the upcoming years, the company aims for adjusted EPS between $4.00 and $4.75 for 2025, slightly below the consensus forecast of $4.67. This underwhelming guidance may lead investors to reevaluate their positions in light of market dynamics.

Despite the grim outlook, ADM announced cost-saving measures ranging from $500 million to $750 million and increased its dividend by 2%, striving to assure investors of its commitment to shareholder returns, yet the environment remains challenging.

Stocks: ADM