Monsanto Company (MON) is scheduled to report fourth-quarter fiscal 2014 (ended Aug 2014) results on Oct 8, before the market opens. The Zacks Consensus Estimate for the quarter is pegged at a loss of 24 cents per share.
Monsanto Company reported better-than-expected results in third quarter of fiscal 2014, with an earnings surprise of +4.52%. However, the bottom line was down 2.4% year over year. Let us see how things are shaping up and whether the company will be able to post upbeat results this quarter.
Factors to Influence Q4 Results
Monsanto is likely to capitalize on the increased sales of corn and soybeans in the quarters ahead. New products have been developed and launched to facilitate an increase in its market share. The recently publicized Intacta technology is expected to yield greater soybean growth over the coming years. Further, Monsanto has been making successful attempts to reduce costs over the past few quarters. Also, share buybacks are considered as a favored mode for boosting profitability.
However, overseas operations of the company increase the risk of loss in the event of adverse foreign currency movements. In fiscal 2014, negative impacts from foreign currency transactions are expected to affect earnings by roughly 15 to 20 cents per share. Also, the company faces stiff competition in the Seeds and Genomics segment, compelling it to come up with high-yielding varieties. This involves huge research and development expenses. At the same time, a high debt level of roughly $3 billion worsens the company’s financial obligations.
Earnings Whispers?
Our proven model not conclusively shows that Monsanto Company 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. That is not the case here as you will see below.
Zacks ESP: Monsanto Company has an ESP of 0.00% for fourth-quarter fiscal 2014. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 24 cents per share.
Zacks Rank: Monsanto Company currently has a Zacks Rank #4 (Sell). This, when combined with a 0.00% ESP, makes surprise prediction difficult.
We particularly caution against Zacks Rank #4 and 5 (Sell-rated) stocks going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
The Andersons, Inc. (ANDE), with Earnings ESP of +1.28% and a Zacks Rank #1 (Strong Buy).
Calavo Growers Inc. (CVGW), with Earnings ESP of +6.52% and a Zacks Rank #2 (Buy).
Archer-Daniels-Midland Company (ADM), with Earnings ESP of +5.33% and a Zacks Rank #3 (Hold).
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