Should investors worry? Not really. Sales of the herbicide may not be as strong as they once were, but the future of Monsanto lies not in Roundup, but in its genes.
Even with the drop in Roundup sales, Monsanto was still able to increase its sales by over 8% thanks to a nearly 20% increase in sales of seeds. And those sales come with higher gross margins, which jumped from 59% in the year-ago quarter to 62% this quarter.
Throw in lower sales, general, and administrative costs relative to sales, and a lower tax rate, and Monsanto was able to increase earnings per share by 22%. That figure does exclude one-time charges for things such as acquisition this quarter and the payment from Solutia
What, weeds worry?
I like this business model better because it's easier for the company to grow revenue indefinitely. Like sales of Roundup or fertilizers from PotashCorp
Monsanto's sales will always be somewhat tied to the price of commodities, but as long as the company continues to develop better crops, it should be a strong grower in any economic climate.
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