Photo Credit: Mike Mozart

Monsanto Co. (MON) Materials – Chemicals | Reports April 6, Before Market Opens

Key Takeaways

Monsanto, the leader in agrochemical and agricultural biotechnology, is scheduled to report FQ2 2016 earnings Wednesday, before the opening bell. Chemically and genetically modified products have been a point of contention the past 5 years, causing many agricultural companies to abandon their traditional means of harvesting. However, Monsanto remains stuck in its ways and continues to mass produce chemically infused products. As a result, shares have plummeted 24.2% on 5 consecutive quarters of missing its revenue target. 

This quarter should continue the downward trend, as EPS is projected to fall 11% while sales are expected to decline 7%, on a year over year basis. Consequently, the Estimize community is looking for EPS of $2.53 on $4.81 billion in revenue, 8 cents higher than Wall Street on the bottom line and $27 million on top. However out Select Consensus, which heavily weights our most accurate analysts and recent estimates, is expecting a more modest beat of 1 cent. Monsanto is seeing rampant downward revisions activity lately, watching EPS fall 16% and revenue down 7% in the past three months. The current volatility in the global agro industry and strong U.S. dollar bode poorly for the remainder of Monsanto’s fiscal 2016. 

Monsanto’s core business has been a hot button issue for years now and has recently caused revenue to slip. Monsanto is currently facing three major headwinds, namely currency headwinds, weak commodity prices and unfavorable glyphosate conditions. Like other multinationals, a strong U.S. dollar has put immense pressure on its revenues and margins. This is likely to continue through the remainder of fiscal 2016. Moreover, key markets such as Latin America and Canada have been hit with weak corn volume and glyphosate rates. Despite the current volatility, Monsanto is aggressively repurchasing shares and is in talks to takeover pharmaceutical giant, Bayer.