Zacks
0
All posts from Zacks
Zacks in Our Research. Your Success.,

Monsanto Misses Q2 Earnings Estimates, Cuts FY16 Guidance

Monsanto Company MON reported disappointing results for second-quarter fiscal 2016 (ended Feb 29, 2016). The company’s earnings came in at $2.42 per share, below the Zacks Consensus Estimate of $2.45. Earnings were also lower than the year-ago figure of $2.90 per share.

Revenues

In fiscal second-quarter 2016, Monsanto generated revenues of $4,532 million, down 12.8% year over year and short of the Zacks Consensus Estimate of $4,776 million.

On a segmental basis, revenues from Seeds and Genomics decreased 8.6% year over year to $3,817 million. Revenues from Agricultural Productivity declined 29.8% year over year to $715 million.

Cost & Margins

Monsanto’s cost of sales fell 10.4% year over year to $1,934 million. Gross margin dropped 120 basis points to 57.3%.

Operating expenses were $935 million, down 8.2% year over year, accounting for 20.6% of total revenue. Interest expense increased 12% to $103 million.

Balance Sheet and Cash Flow

Exiting fiscal second-quarter 2016, Monsanto’s cash and cash equivalents fell to $1,050 million from $3,701 million at the end of fiscal 2015. Long-term debt was $7,945 million, down 5.7% year over year.

In the quarter, Monsanto generated cash of $1,389 million from its operating activities, down from $1,518 million a year ago. Capital spending declined 4.3% year over year to $489 million. Dividend payments in the quarter totaled $491 million.

Free cash flow at the end of the first half of fiscal 2016 was $906 million, lower than $986 million recorded in the year-ago period.

Outlook

Monsanto aims to improve its business on the back of its innovation based growth strategy. However, considering the headwinds prevailing in the global and industrial markets, the company has lowered its fiscal 2016 ongoing earnings guidance to the range of $4.40–$5.10 per share from $5.10–$5.60 per share. Free cash flow for fiscal 2016 is estimated to be between $1.6–$1.8 billion on disciplined cash management activities.

Stocks to Consider

Monsanto presently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Limoneira Company LMNR, Syngenta AG SYT and Alamos Gold, Inc. AGI. All three companies currently carry a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.http://www.zacks.com/registration/pfp/?ALERT=RPT_7BST_LP194&... blog">Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
SYNGENTA AG-ADR (SYT): Free Stock Analysis Report
 
MONSANTO CO-NEW (MON): Free Stock Analysis Report
 
LIMONEIRA CO (LMNR): Free Stock Analysis Report
 
ALAMOS GOLD INC (AGI): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research