Contrasting Archer Daniels Midland (NYSE:ADM) and Adecoagro (NYSE:AGRO)

Adecoagro (NYSE:AGRO) and Archer Daniels Midland (NYSE:ADM) are both consumer staples companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, earnings, institutional ownership, profitability, risk, dividends and analyst recommendations.

Profitability

This table compares Adecoagro and Archer Daniels Midland’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Adecoagro	-0.55%	-1.17%	-0.46%
Archer Daniels Midland	1.34%	7.39%	3.17%

Analyst Recommendations

This is a summary of current ratings and recommmendations for Adecoagro and Archer Daniels Midland, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Adecoagro	1	4	2	0	2.14
Archer Daniels Midland	3	5	1	0	1.78

Adecoagro currently has a consensus target price of $10.84, suggesting a potential downside of 28.98%. Archer Daniels Midland has a consensus target price of $59.86, suggesting a potential downside of 18.95%. Given Archer Daniels Midland’s higher possible upside, analysts clearly believe Archer Daniels Midland is more favorable than Adecoagro.

Dividends

Adecoagro pays an annual dividend of $0.35 per share and has a dividend yield of 2.3%. Archer Daniels Midland pays an annual dividend of $2.08 per share and has a dividend yield of 2.8%. Adecoagro pays out -437.5% of its earnings in the form of a dividend. Archer Daniels Midland pays out 93.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Adecoagro has raised its dividend for 3 consecutive years and Archer Daniels Midland has raised its dividend for 53 consecutive years. Archer Daniels Midland is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Adecoagro has a beta of 0.08, suggesting that its share price is 92% less volatile than the S&P 500. Comparatively, Archer Daniels Midland has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500.

Earnings and Valuation

This table compares Adecoagro and Archer Daniels Midland”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Adecoagro	$1.43 billion	1.07	-$6.76 million	($0.08)	-190.80
Archer Daniels Midland	$80.27 billion	0.44	$1.08 billion	$2.22	33.27

Archer Daniels Midland has higher revenue and earnings than Adecoagro. Adecoagro is trading at a lower price-to-earnings ratio than Archer Daniels Midland, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

45.3% of Adecoagro shares are owned by institutional investors. Comparatively, 78.3% of Archer Daniels Midland shares are owned by institutional investors. 6.7% of Adecoagro shares are owned by company insiders. Comparatively, 1.2% of Archer Daniels Midland shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Archer Daniels Midland beats Adecoagro on 12 of the 17 factors compared between the two stocks.

About Adecoagro

Adecoagro S.A. operates as an agro-industrial company in South America. The company mainly operates through three segments: Farming; Sugar, Ethanol and Energy; and Land Transformation. It engages in farming crops, rice and other agricultural products, dairy operations, and land transformation activities, as well as sugar, ethanol, and energy production activities. The company is involved in the planting, harvesting, and sale of grains, oilseeds, and fibers, including wheat, corn, soybeans, peanuts, cotton, sunflowers, and others; provision of grain warehousing/conditioning, handling, and drying services to third parties; and purchase and sale of crops produced by third parties. It also plants, harvests, processes, and markets rice; and produces and sells raw milk, UHT, cheese, and powder milk. In addition, the company engages in the cultivating and transforming of sugarcane into ethanol, sugar, and electricity. Further, it is involved in the identification and acquisition of underdeveloped and undermanaged farmland, and the realization of value through the strategic disposition of assets. Adecoagro S.A. was founded in 2002 and is based in Luxembourg, Luxembourg.

About Archer Daniels Midland

Archer-Daniels-Midland Company engages in the procurement, transportation, storage, processing, and merchandising of agricultural commodities, ingredients, flavors, and solutions in the United States, Switzerland, the Cayman Islands, Brazil, Mexico, Canada, the United Kingdom, and internationally. It operates in three segments: Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition. The company originates, merchandises, stores, and transports agricultural raw materials, such as oilseeds and soft seeds. It also engages in the agricultural commodity and feed product import, export, and distribution; and various structured trade finance activities. In addition, the company offers soybean meal and oil; vegetable and salad oils and protein meals; ingredients for the food, feed, energy, and industrial customers; margarine, shortening, and other food products; and partially refined oils to produce biodiesel and glycols for use in chemicals, paints, and other industrial products. Further, it provides peanuts, peanut-derived ingredients, and cotton cellulose pulp; sweeteners, corn and wheat starches, syrup, glucose, wheat flour, and dextrose; alcohol, and other food and animal feed ingredients; ethyl alcohol and ethanol; corn gluten feed and meal; distillers' grains; corn germ; and citric acids. Additionally, the company provides proteins, natural flavors, flavor systems, natural colors, emulsifiers, soluble fiber, polyols, hydrocolloids, probiotics, prebiotics, postbiotics, enzymes, and botanical extracts; and other specialty food and feed ingredients; edible beans; formula feeds, and animal health and nutrition products; and contract and private label pet treats and food products. It also offers futures commission merchant; commodity brokerage services; cash margins and securities pledged to commodity exchange clearinghouse; and cash pledged as security under certain insurance arrangements. The company was founded in 1902 and is headquartered in Chicago, Illinois.