ADM - Archer-Daniels-Midland: Solid Fundamentals Bargain Price

2024-03-31 22:41:15 ET

Summary

• Archer-Daniels-Midland shares have fallen 12% in the past three months, while the S&P 500 has returned 10%.
• ADM faced unfavorable headlines and a lack of trust due to an investigation into its accounting practices.
• The company's internal investigation found certain intersegment sales were not recorded at market amounts, but these adjustments did not impact its financial statements or incentive plans.
• Going forward, it benefits from a strong business model, growth opportunities, a focus on dividend growth and buybacks, and a highly favorable valuation.

Introduction

On December 27, I wrote an article titled " Ultrawide Moat, Great Valuation, Dividend Growth: Archer-Daniels-Midland Has It All. "

Although a three-month period is not a great measurement to check if a long-term thesis is working out, it needs to be said that Archer-Daniels-Midland Company ( ADM ) shares have fallen 12% since then. During this period, the S&P 500 has returned 10%.

While ADM had been struggling with margins due to lower inflation, the main reason why its stock price is down is a lack of trust after some very unfavorable headlines started to pop up in January....

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