Why Archer Daniels Midland Stock Plummeted by 6% Today

Source The Motley Fool

Archer Daniels Midland (NYSE: ADM) -- also known as ADM -- had some news to report after the market closed Monday, and investors didn't find it comforting. They traded out of the stock assertively on Tuesday, bidding it down by about 6% through the close of the session. That did not compare well to the S&P 500 index's gain of more than 1% for the day.

Preliminary results didn't look great

What set off that exodus was the release of Archer Daniels Midland's preliminary third-quarter and nine-month results. Its non-GAAP (adjusted) net income for Q3 is expected to be $530 million, or $1.09 per share. That's well down from Q3 2023's profit of $880 million, or $1.63 per share. The company did not provide any revenue numbers on Monday.

Meanwhile, year-to-date cash from operating activities was forecast at just under $2.47 billion. In contrast to the bottom line, this was notably above the parallel figure from 2023 ($1.89 billion).

Yet it's the profit line that's typically of most interest to investors, and ADM also disappointed on that front with its full-year guidance. Management lowered its forecast range for adjusted earnings per share to $4.50 to $5.00.

Culprit identified

In the preliminary release, ADM chalked up the expected earnings underperformance to two divisions -- agricultural services & oilseeds, and nutrition -- which it said were negatively "impacted by softer than expected market conditions and the pace of our planned improvement efforts."

"We are taking the necessary actions to improve performance and drive continued value creation," the company said.

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