Agricultural products company Monsanto (NYSE:MON) will report third-quarter 2007 financial results on Thursday. Will investors on the sidelines be green with envy?

What analysts say:

  • Buy, sell, or waffle? A lucky 13 analysts cover Monsanto, with seven rating it a buy. Five say it's a hold at these levels, and one genetically modified analyst says sell.
  • Revenues. Sales are expected to sprout 18% to $2.77 billion, as corn prices continue to pop higher.
  • Earnings. As a result, profits are expected to blossom as well, growing 63% to $0.98 per share.

What management says:
Although there's a certain Luddite mindset that wants to associate Monsanto's genetically modified research as capable of producing a murderous Little Shop of Horrors-style Venus flytrap, the company should more correctly be viewed as generating plants -- like corn -- that are hardier, less susceptible to disease, and more easily grown to keep up with the demand to feed the world. If not feed it, then certainly power it. Ethanol production continues to be the main driver for corn seed, and Monsanto recently announced that because of a strong ending to the U.S. corn planting season, it was raising full year guidance.

What management does:
Corn remains the kernel of Monsanto's ability to turn out gross margins in the neighborhood of 50% fairly consistently. Corn seed and traits account for 70% of the company's revenues and two-thirds of its gross profits. It's expecting to grab market share as a result from Dow Chemical (NYSE:DOW) and Syngenta (NYSE:SYT).

Margin

02/06

05/06

08/06

11/06

02/07

Gross

49.7%

50%

49%

48.8%

48.7%

Operating

17.2%

17.7%

17.1%

16.8%

17.6%

Net

6.1%

9.8%

9.4%

9.6%

10.4%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
The outsized demand for corn for ethanol production has powered Monsanto higher this year, all the while contracting its P/E ratio as earnings grew like a cornstalk. It started the year with a forward multiple of 40, but with current earnings expectations, that's now down below 30 or so. While that might seem pricey, another strong crop season will continue to push profits up, which could raise the stock price further.

Monsanto has been a lot stronger this year than I anticipated, rising 30% since the beginning of the year. Right or wrong, though there are indeed many uncertainties and controversies that surround its practices, I now believe this agricultural company can grow higher.

Related Foolishness:

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Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.