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Monsanto (MON) to Report Q4 Earnings: What's in the Cards?

Monsanto Company MON is slated to report fourth-quarter fiscal 2017 (ended August 2017) results on Oct 4, before the market opens.

Monsanto’s shares have yielded a return of 2.2%, outperforming 0.4% growth registered by the industry, in a month’s time.

Over the last four quarters, the company pulled off an impressive average positive earnings surprise of 319.13%.

Let’s see how things are shaping up prior to this announcement.

Factors to Play

Solid demand for crop-yield enhancing products (such as Roundup Ready 2 Xtend Soybeans) and specialized glyphosate-based herbicides (such as XtendiMax) are anticipated to bolster Monsanto’s sales in the to-be-reported quarter. In addition, numerous investments made by the company have been enhancing its Climate FieldView platform, as well as the seed and trait solutions portfolio. This, in turn, is likely to boost the company’s top-line performance in the fiscal fourth quarter.

Robust revenues, greater operational efficacy and crop-acreage area expansion are expected to augment Monsanto’s profitability in the quarter under review. The company estimates to report adjusted earnings at the high-end of the $4.50-$4.90 per share range for fiscal 2017, on an ongoing basis.

Moreover, Monsanto anticipates to secure cash worth nearly $70 million in the fiscal fourth quarter from the sale of non-core assets through various strategic deals.

However, over the last 60 days, the Zacks Consensus Estimate for the stock remained unchanged for both fiscal 2017 and 2018, reflecting neutral market sentiments.

We believe headwinds such as declining product prices, stiff industry rivalry or a stronger U.S. dollar might dent results in the quarter to be reported.

Monsanto accepted Bayer AG’s BAYRY buyout offer worth $66 billion, inclusive of debt, in September 2016. Both companies estimate to close the deal by the fall of calendar year 2017.

Earnings Whispers

Our proven model does not conclusively show that Monsanto will likely beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. That is not the case here as we will see below.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: Monsanto currently has an Earnings ESP of 0.00%. This is because both the Zacks Consensus Estimate and the Most Accurate estimate are pegged at a loss of 38 cents per share.

Monsanto Company Price and EPS Surprise


Monsanto Company Price and EPS Surprise | Monsanto Company Quote

Zacks Rank: Monsanto carries a favorable Zacks Rank #3. However, an Earnings ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks that Warrant a Look

Here are two stocks within the industry that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Cliffs Natural Resources Inc. CLF, with an Earnings ESP of +0.90%, and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross Gold Corporation KGC, with an Earnings ESP of +56.25%, and a Zacks Rank #2.

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