ADM
Archer-Daniels-Midland Company
$77.52
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 39.1% above fair value
You pay
$77.52
Bear
$44.58
Fair
$55.73
Bull
$66.88
Bear
$44.58
-42.5%
$4.79 × 8x P/E
Fair
$55.73
-28.1%
$4.79 × 10x P/E
Bull
$66.88
-13.7%
$4.79 × 12x P/E
Key Value Driver
Normalized P/E multiple (10x base case)
Implied Market Multiple
16.2x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $74.00 from 36 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $55.73 per share.
Warnings
The company's reported profits differ from official accounting profits by 115%. Check what costs are being left out of the adjusted number.
The company pays out 92% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Dividend-based valuation: $108.69 (above our primary estimate by 127%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $74.00 (from 36 analysts). Our estimate is 35% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples