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 (MON +0.00%). 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 (DD +0.00%) 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 (MOS +1.33%) and farm machinery giant Deere (DE 0.45%) 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.
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