Premium agro-chemical producing firm, Monsanto Company (MON), recently secured the approval from the U.S. Department of Agriculture (USDA) regarding the usage of a new kind of herbicide-resistant soybean and cotton seeds.
Monsanto has historically expanded its business in the agricultural industry on the back of innovative and genetically-tailored herbicides and seeds. The company designs these products with the aim of boosting crop productivity as well as controlling weed-destroying chemicals in different types of agricultural products.
Though the USDA has approved Monsanto’s new genetically modified (“GMO”) seeds, the Environmental Protection Agency is still evaluating its features. This is primarily due to the presence of a specialized new component called dicamba in the seeds.
The USDA provides sound policies on various issues related to the development of national resources, rural development, nutrition, food and agriculture. In sync with these policies, Monsanto tries to improve and sustain agricultural productivity through innovation-based strategies.
Over the last four trailing quarters, Monsanto generated an average earnings surprise of 8.05%. In the last reported quarter, the company’s adjusted earnings surpassed the Zacks Consensus estimate by 38.2%. The beat was largely attributable to its innovation-based growth plans.
Moving forward, declining oil prices are expected to lower the input costs of this energy-intensive agricultural stock. As a result, top line is expected to improve in the upcoming quarter, driven by lower product prices. In addition, approval of the new GMO seeds supports Monsanto’s research-based growth trajectory. Based on these factors, we expect the company to beat the estimates in the upcoming quarters.
With a market capitalization of $56.70 billion, Monsanto currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Wilmar International Ltd. (WLMIY), Cosan Ltd. (CZZ) and Gruma S.A.B. de CV (GMK). While both Cosan and Gruma carry a Zacks Rank #2 (Buy), Wilmar carries a Zacks Rank #1 (Strong Buy).
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