Can Monsanto Regain Its Record Highs?

On Wednesday, Monsanto (NYSE: MON  ) will release its latest quarterly results. Given the importance of agriculture in the world, Monsanto has seen its stock rise substantially over the past few years. But it still trails where it was in early 2008, during the height of the commodity boom. Can Monsanto regain all of its lost ground?

Monsanto makes a wide variety of chemicals and fertilizers for the agricultural industry. But the division with the most promise -- and controversy -- is its seed business, in which the company has engineered crops with a number of valuable traits in order to adapt to different growing conditions around the world. Let's take an early look at what's been happening with Monsanto over the past quarter and what we're likely to see in its quarterly report.

Stats on Monsanto

Analyst EPS Estimate

$1.61

Change From Year-Ago EPS

(1.2%)

Revenue Estimate

$4.42 billion

Change From Year-Ago Revenue

4.8%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

Will Monsanto's earnings grow this quarter?
Analysts have had mixed views of Monsanto's earnings prospects in recent months. They've reduced their calls for the May quarter by $0.13 per share, but they've boosted their full-year fiscal 2013 and 2014 estimates modestly. The stock is essentially unchanged since mid-March, having given up gains from earlier in the quarter.

Monsanto's crop technology is the envy of the industry, and the company has had great success in getting its competitors to agree to cross-licensing deals. DuPont (NYSE: DD  ) and Monsanto settled their joint disputes in March, and Monsanto will receive $1.75 billion over 10 years under the deal they reached. Similarly, Dow Chemical (NYSE: DOW  ) agreed to trade its Enlist Weed Control System for Monsanto's Corn Rootworm III technology in April.

Monsanto faces some problems, though, especially in maintaining its relationships with farmers. The Supreme Court decided in May that farmers weren't allowed to take Monsanto seeds and use them over multiple years without paying the company for them. At the same time, however, the U.S. Department of Agriculture hit both Monsanto and Dow with denials of their requests to approve crops that would survive various herbicidal applications. Hundreds of thousands of people filed comments or signed petitions against the use of genetically modified organisms, showing the extent of the sentiment against Monsanto.

Indeed, Monsanto's GMO work could pose a threat to U.S. exports, as Japan and South Korea canceled wheat imports earlier this month when genetically modified wheat was found. With countries around the world imposing restrictions on genetically modified food, Monsanto faces an uphill battle with farmers looking to take advantage of high yields to feed the rest of the world.

In Monsanto's quarterly report, watch for the company to take a stand on how it plans to handle its public relations in light of the GMO controversy. Long-run results depend on Monsanto's ability to navigate the world markets effectively.

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Read/Post Comments (5) | Recommend This Article (3)

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 June 24, 2013, at 5:32 PM, nomofunfun wrote:

    Wow, no comment yet from Dr. Fun?

    Will check back later to enjoy some levity, or maybe just read it on Yahoo since he lost access to the Parkersburg paper.

  • Report this Comment On June 24, 2013, at 7:13 PM, funfundvierzig wrote:

    DuPont will paying a minimum of $1.75 billion in license fees to Monsanto for Monsanto's superior GM traits. DuPont was essentially compelled to settle and agree to these terms after (a) a federal jury found in favour of Monsanto in a landmark patent infringement case, and awarded Monsanto $1 billion. This huge award could have been increased to $3 billion given the egregious misconduct of DuPont, and (b) U. S. DIstrict Court Judge Richard Webber disclosed in December 2012 he had sanctioned DuPont for engaging in FRAUD on the court, and defrauding investors and the public with respect to its seed business and its contractual rights to use Monsanto's superior technology without paying for it (effectively stealing it!).

    ...funfun..

  • Report this Comment On June 24, 2013, at 7:54 PM, nomofunfun wrote:

    Ah yes, Dr. Fun IS back.

    Just so you don't forget these important questions...

    ""You owe your many readres answers to MANY questions, but here are three that you've managed to avoid answering on numerous occasions:

    1. Why is it OK for Hughie "Cueball" Grant to sell $26.5 million in shares when it's not for Ellen to sell $4.5 million?

    2. Why did Monsanto cover-up that it was trying more BANNED GMO wheat when it was caught secretly planting them in an Oregon field?

    3. Why did thousands march against Monsanto but only ONE (you!) march against DuPont?

    Kindly answer these SIMPLE questions. You will be hounded by your readers till you offer a reply."

  • Report this Comment On June 25, 2013, at 4:59 AM, tempchennai wrote:

    Monsanto is the most evil company in the world! and the people have getting more and more aware of this fact.

  • Report this Comment On June 25, 2013, at 5:01 AM, tempchennai wrote:

    Just checked that 95% hate Monsanto on Amplicate! Spread the news.

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