ADM

We rate Archer-Daniels-Midland Co (ADM) as a Hold with a composite score of 58.9/100 at a current price of $68.02. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in stability (93th percentile) and value (68th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (30th percentile) and quality (49th percentile) tempers our overall conviction. We assign a Narrow Moat rating (40/100), Low uncertainty, and Standard capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Archer-Daniels-Midland Co holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 58.9/100 places it at rank #795 in our full 7,333-stock universe. With a $28.7B market capitalization, Archer-Daniels-Midland Co operates at meaningful scale within the Manufacturing sector, providing competitive advantages in distribution, procurement, and customer reach.

Despite positive momentum (61th percentile), revenue contraction of -8% creates a divergence between price action and fundamental trajectory. This divergence suggests either that the market is looking through near-term weakness or that technical factors are temporarily inflating the stock. Investors should assess whether the revenue decline reflects cyclical weakness or structural challenges.

The margin cascade tells an important story: gross margins of 6% (-36.1pp vs sector) narrow to operating margins of 1% (-0.2pp vs sector) and net margins of 0.8%, yielding a gross-to-net conversion rate of 12%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $68.02, Archer-Daniels-Midland Co is trading near fair value based on current fundamentals. Our value factor score of 68/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 51.2x (a 130% premium to the sector median of 22.3x), EV/EBITDA of 45.4x (at a premium), P/B of 1.4x, P/S of 0.4x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Low uncertainty rating to Archer-Daniels-Midland Co. The company exhibits strong financial stability with a beta of 0.38, conservative leverage (33% D/E), and a stability factor in the 93th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.38 — while defensive, this may indicate limited upside participation in bull markets; elevated valuation multiple (P/E 51.2x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 93th percentile and quality factor at the 49th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (93th percentile) suggests predictable business dynamics; a 3.40% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Archer-Daniels-Midland Co's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 2.8%, and the balance sheet is managed within acceptable parameters (D/E: 33%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; Archer-Daniels-Midland Co falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 3.40% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, Archer-Daniels-Midland Co receives a Hold rating with a composite score of 58.9/100 (rank #795 of 7,333). Our quantitative framework assigns a Narrow Moat (40/100, trend: stable), Low uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 60/100.

Our analysis supports a neutral stance on Archer-Daniels-Midland Co. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.