Weighing the Pros and Cons of This Food Stock

ADM is drifting into oversold territory, despite the solid fundamentals

May 13, 2021 at 4:42 PM

Archer-Daniels-Midland Company (NYSE:ADM) is an American multinational food processing and commodities trading corporation. On May 5, Archer-Daniels-Midland declared a cash dividend of $0.37 per share, marking ADM’s 358th consecutive quarterly payment and toting a record of 89 years of uninterrupted dividends. The dividend will be payable on June 9 to shareholders of record on May 19. Archer-Daniels-Midland stock's forward dividend currently stands at $1.48, which is equivalent to a dividend yield of 2.21%.

On the charts, ADM scored a record high of $68.68 on May 10. Since late March, the shares' ascending 10-day moving average has acted as support. One note of caution though: this uptrend has sent the stock's 14-Day Relative Strength Index (RSI) up to 72, firmly in overbought territory, which suggests ADM could be due for a short-term breather.

Archer-Daniels-Midland has already managed to increase its trailing 12-month revenue by 6% and its trailing 12-month net income by 16.8% as compared to what was reported for fiscal 2020. However, ADM has not been able to maintain consistent growth over the past few years. A couple examples include a slight revenue decline in fiscal 2020 and a significant 24% net income decrease in fiscal 2019.

Nonetheless, Archer-Daniels-Midland stock still qualifies a strong value play, considering its low forward price-earnings ratio of 16.26 and the company's secure dividend. However, investors should be aware of ADM's relatively weak balance sheet. ADM owes $12.29 billion in total debt and only holds $824 million in cash.

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