Will Q3 Earnings Hold A Surprise For Monsanto (MON) Stock?
Zacks Investment Research | Jun 23, 2016 10:06PM ET
Monsanto Company (NYSE:MON) is scheduled to report third-quarter fiscal 2016 results before the opening bell on Jun 29.
Let’s see how things are shaping up prior to this announcement.
Factors to Consider
Monsanto’s strategic inorganic investments, as well as initiatives toward greater innovation and product portfolio solidification are expected to have favorable impact on the quarterly revenues and earnings. Also, the company’s tactical restructuring efforts should enhance profitability.
Despite the positives the company remains exposed to certain macroeconomic risks. Negatives like economic slowdown in major emerging nations like China, cyclical downturn of agricultural industry, low prices of agro products, strengthening U.S. dollar and devaluating Argentinean Peso might overshadow some of the positive aspects. Based on these issues, the company had lowered its fiscal 2016 earnings guidance to the range of $4.40–$5.10 per share from the previous estimation of $5.10–$5.60.
Also, Monsanto usually undertakes strategic mergers and acquisitions to enhance its business. However, in an unusual turn of events the company was approached by Bayer AG (DE:BAYGN) in May 2016 with a proposed takeover bid. Though Monsanto rejected the $122 per share bid on grounds of being “insultingly low,” we expect the companies to engage in further negotiations going forward.
Notably, Monsanto’s shares have been on the rise since Apr 1, 2016 and have surged 25% to date. Moreover, Monsanto’s stock gained 1.86% to $109.15 per share on Jun 23, 2016 after its genetically modified soybeans’ (GMO) deal was successful with Argentina.
Earnings Whispers
Our proven model does not conclusively show that Monsanto will beat earnings this quarter. That is because a stock needs to have both a positive Zacks Investment Research
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