We expect Archer-Daniels-Midland Company (ADM) to beat expectations when it reports third-quarter 2014 results on Nov 4 before the opening bell.
Why a Likely Positive Surprise?
Our proven model shows that Archer-Daniels is likely to beat earnings when it reports on Nov 4 because it has the right combination of two key ingredients.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is at +2.60%. This is a meaningful and leading indicator of a likely positive earnings surprise for the company.
Zacks Rank: Archer-Danielscarries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank of #1, 2 and 3 have a significantly higher chance of beating earnings.
Conversely, the Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
Archer-Daniels’ Zacks Rank #3 and ESP of +2.60% make us reasonably confident of a positive earnings beat.
What is Driving the Better-Than-Expected Earnings?
The company’s earnings in the previous quarter benefited from strong ethanol and oilseeds product demand along with improvement in the U.S. grain export volumes. Further, we believe that the company’s constant focus on enhancing its processing capabilities and global footprint through strategic acquisitions and joint ventures bodes well for its growth. Also, we remain impressed with the company’s cost containment efforts and cash flow generating capacity. Hence, we remain optimistic about Archer-Daniels’ performance this quarter.
Stocks that Warrant a Look
Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Best Buy Co., Inc. (BBY) has an Earnings ESP of +4.17% and a Zacks Rank #1 (Strong Buy).
L Brands, Inc. (LB) has an Earnings ESP of +6.25% and a Zacks Rank #2 (Buy).
The Kroger Co. (KR) has an Earnings ESP of +3.28% and a Zacks Rank #2.
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