Archer Daniels Midland Company ADM has been reeling under rough waters due to challenges it has been facing for a while. A highly dynamic landscape, along with weak market conditions and policy uncertainty, has been making things difficult for the stock. Sluggishness in its Ag Services and Oilseeds unit for quite some time now is another concern.

Consequently, shares of this renowned agricultural producer have lost 32.1% in the past year, underperforming its Agriculture - Operations industry and broader Consumer Staples sector’s increases of 4.3% and 1%, respectively. The stock has declined wider than the S&P 500 index’s 1.6% dip.

What's not Working in Favor of ADM?

In the Ag Services and Oilseeds segment, the company has been grappling with numerous headwinds in the agriculture cycle, with few market dislocations and increased cost inflation. The Crushing subsegment witnessed depressed vegetable oil demand and low prices, mainly owing to higher market supply and uncertainty related to the Producer Tax Credit policy change. 

In Refined Products and Other, North America margins were pressurized by the increased supply of low-carbon intensity feedstock. Weak demand from food customers in North America has also negatively affected refining margins on a year-over-year basis. Such factors have been hurting the overall segment’s performance and, in turn, ADM’s results. For 2025, ADM expects the AS&O segment operating profit to be lower than 2024.

In the Nutrition segment, the company has been experiencing mixed demand in a few food and beverage product categories, thanks to shifts in consumer discretionary spend and tastes. Human Nutrition was hurt by inflation, leading to weak demand and volumes for alternative proteins in certain regions.

Several market and geopolitical challenges, with ongoing price weakness of main feed ration commodities, are acting as deterrents. The feed additives market was adversely affected by volatility in vitamins due to supply disruptions. Potential risks and uncertainties, comprising complying with the evolving regulations, obtaining the regulatory approvals and other operational challenges, are other deterrents. 

In addition, the company faces stiff competition with respect to raw materials, transportation services, other materials and supplies. All in all, these limitations are hurting the company’s results for a while. In the most recent quarter, Archer Daniels missed top-line estimates, while both earnings and revenues declined on a year-over-year basis.

ADM's Price Performance

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ADM’s Downward Earnings Estimate Revisions

Given the headwinds surrounding the stock, the Zacks Consensus Estimate for 2025 has gone south. In the recent past, the consensus estimate for earnings per share (EPS) has dropped 5.1% to $4.24 for 2025. This implies a year-over-year earnings decline of 10.6%.

Final Thoughts on ADM

Although the aforesaid factors are not working in favor of Archer Daniels, the company is making strategies to revert to growth. The company has been actively managing productivity and innovation as well as aligning work to the interconnected trends in food security, health and wellbeing. ADM has been significantly progressing on its strategic pillars, including optimize, drive and growth.

As of now, we advise refraining from investing in ADM, as the company currently carries a Zacks Rank #4 (Sell).

Better-Ranked Stocks to Consider

United Natural Foods UNFI, which is a distributor of natural, organic and specialty food in the United States, currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

UNFI delivered a trailing four-quarter earnings surprise of 408.7%, on average. 

The Zacks Consensus Estimate for UNFI’s current financial-year sales and EPS indicates growth of 1.9% and 485.7%, respectively, from the year-ago numbers.

Utz Brands UTZ manufactures salty snacks under popular brands and has a Zacks Rank of 2. UTZ delivered a trailing four-quarter average earnings surprise of 8.8%.

The Zacks Consensus Estimate for UTZ’s current financial-year sales and EPS implies growth of 1.2% and 10.4%, respectively, from the year-ago numbers.

Nomad Foods NOMD, which manufactures frozen foods, currently carries a Zacks Rank of 2. NOMD delivered a trailing four-quarter earnings surprise of 5%, on average.

The Zacks Consensus Estimate for Nomad Foods’ current financial-year EPS indicates growth of 3.1% from the year-ago number.

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Archer Daniels Midland Company (ADM) : Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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