Archer Daniels Midland Company ADM is slated to report second-quarter 2015 results on Aug 4, before the opening bell. In the last quarter, the company had delivered a positive earnings surprise of 8.5%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Archer Daniels has outperformed the Zacks Consensus Estimate by an average of 6.3% over the past four quarters. The company’s consistent focus on enhancing its processing capabilities and global footprint through strategic acquisitions bodes well. However, soft industry ethanol margins in the Corn processing segment and the ongoing currency headwinds remain concerns, making us cautious of the upcoming results. Hence, we would prefer to wait and see what’s in store for Archer Daniels in the quarter to be reported.
Earnings Whispers
Our proven model does not conclusively show that Archer Daniels is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Archer Daniels is currently pegged at -7.69%. This is because the Most Accurate estimate of 60 cents stands below the Zacks Consensus Estimate of 65 cents.
Zacks Rank: Archer Daniels’ Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some 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:
DSW Inc. DSW has an Earnings ESP of +2.38% and a Zacks Rank #2 (Buy).
Dollar Tree Inc. DLTR has an Earnings ESP of +2.94% and a Zacks Rank #3.
Ralph Lauren Corporation RL has an Earnings ESP of +0.99% and a Zacks Rank #3.
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