Will Monsanto's Earnings Bounce Back?

2013 is here, and it won't be long before earnings season starts ramping up. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Let's turn to Monsanto (NYSE: MON  ) . The agricultural giant is scheduled to release its fiscal first-quarter earnings next Tuesday before the opening bell, so let's take a look at what's been happening with the company over the past quarter.

Stats on Monsanto

Analyst EPS Estimate

$0.37

Change from Year-Ago Actual EPS

61%

Revenue Estimate

$2.64 billion

Change from Year-Ago Revenue

8.2%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo Finance.

Can Monsanto keep growing?
Monsanto's stock has done reasonably well over the past quarter, gaining about 8%. The company will be trying to recover from a loss in its last report for the fiscal fourth quarter, traditionally a weak time of year for Monsanto.

The key to Monsanto's success is in how its engineered seed business performs. Although the company leads the industry, Monsanto faces competition from Syngenta (NYSE: SYT  ) and DuPont (NYSE: DD  ) as well as other smaller players. With Monsanto and DuPont fighting over which of their corn seeds produces better yields under certain conditions, you can expect to see plenty of claims from Monsanto in its report about seed yields along with financial numbers.

One big issue investors have to remember about is that the summer's drought conditions will make 2012's results somewhat anomalous for Monsanto, making comparisons less meaningful than they'd otherwise be. Just as fertilizer company Mosaic (NYSE: MOS  ) and farm machinery giant Deere (NYSE: DE  ) have been focusing more on long-term trends than on getting tripped up by short-term concerns, Monsanto's shares have gained ground based on hopes for the rest of 2013.

If Monsanto posts a second consecutive earnings miss, it wouldn't make investors happy. But much more important is any guidance the company gives for the full year. With ambitious expectations of 8% revenue growth and nearly 20% gains in earnings per share for fiscal 2013, any pullback in guidance will likely send Monsanto shares skidding.

What's inside Supernova?
If you're an investor looking for big, long-term winners, Motley Fool co-founder David Gardner's picks have frequently trounced the market. How? Because he's always on the lookout for revolutionary stocks and recommends them before Wall Street catches on to their disruptive potential. If you're interested in how David discovers his winners, click here to get instant access to a personal tour behind David's Supernova service.

Click here to add Monsanto to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


Read/Post Comments (3) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 04, 2013, at 10:59 AM, funfundvierzig wrote:

    "With Monsanto and DuPont fighting over which of their corn seeds produces better yields..."

    Why in the world would any farmer or grower believe what comes out the mouths of DuPont executives and their marketing drones when it comes to their DuPont Pioneer seeds?

    This is the Management of the very Company, U. S. District Court Judge Richard Wright found to have not only engaged in FRAUD ON THE COURT, but to have systematically engaged in defrauding investors and the public about its seed business and operations!

    We won't even bring up DuPont's flawed new product "innovation", a tree-killing lawn herbicide, Imprelis, which has killed and damaged hundreds of thousands of trees nationwide at a cost of what may be as high as $2 billion or more

    Imperiling Imprelis, and stealing and using Monsanto's superior patented seed know-how without paying for it..Now that sure inspires consumer and investor confidence!

    Merely the perspective of one individual investor holding MON, SYT, & DD shares...funfun..

  • Report this Comment On January 04, 2013, at 1:49 PM, ajkmsteph2 wrote:

    there is 100% chance of Monsanto having a profit this report better than last Q. This is anothe rone of the robitic posting made by someone who has no time to explain the details or spend any time researching the company

  • Report this Comment On January 05, 2013, at 8:51 PM, TMFGalagan wrote:

    @ajkmsteph2 - Quite the contrary. Robotic articles give you the figures in the table without any explanation at all. They don't urge you to pay less attention to the headline earnings numbers and more to any future guidance that the company provides in its quarterly report.

    best,

    dan (TMF Galagan)

Add your comment.

DocumentId: 2179152, ~/Articles/ArticleHandler.aspx, 7/26/2014 12:17:43 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement