Wednesday, January 21, 2015

Monsanto's Earnings Will Nosedive, Is It Time To Panic?

This article was first published by Seeking Alpha on January 1, 2015

By Sarfaraz A. Khan. Research Asst. Adnan Mushtaq

Monsanto, one of the leading agrochemical and agricultural biotechnology companies of the world, will release its first quarter results on January 7. As per the company's guidance, its earnings are going to fall substantially. In fact, the company could record its biggest year-over-year drop for first quarter results in four years. Does this mean investors should sell this stock? Let's dig deeper.

Monsanto generates nearly 68% of its annual revenues from its seed and genomics segment in which the company provides seed brands, biotechnology traits for controlling insects and weeds and precision agricultural products. The company also provides genetic materials to other seed companies. The remaining revenues come from its agricultural productivity segment in which Monsanto provides herbicide products.

The U.S. remains its major market from which the company generated a majority (54%) of its revenues in the previous fiscal year. Over the last few years, Monsanto has been able to successfully increase its revenues and earnings.

For the year ended August 31, 2014, the company's net sales climbed from $13.5 billion in 2012 to $14.8 billion in 2013 to $15.8 billion in 2014. This led to a growth in net income from $2 billion in 2012 to $2.4 billion in 2013 to $2.74 billion in 2014. In short, the company has grown its revenues by 17.4% and earnings by a third since 2011. In terms of revenues and EPS growth over the previous two fiscal years, Monsanto has outperformed its competitors Dow Chemical and Du Pont …. Read full article at Seeking Alpha