Monsanto (NYSE: MON) is up half a point so far today to $114.50, having opened at $113.96. They recently came out with their Q2 financial data. The seed company’s share price has been on the rise this week, and volume is high today. It is not even midway through the day yet, and the average volume of 2.7 million trades has almost been reached. The heightened activity comes from a decent Q2 financial report, and it looks like shares of Monsanto will continue to rise on the back of their global expansion in sales.
The seed company’s financial metrics seem to all be in the right place. Their revenue rose from $5.5 to $5.8 billion when compared year-over-year with the previous quarter, and they have outperformed analyst’s estimates for two consecutive quarters now.
The United States has increased overall soybean acreage to record highs, pushing seed revenue up over 21 percent to $820 million during the recent quarter. Their Agriculture Productivity line, which contains herbicides and other crop-protection products, grew over 5 percent to $1.2 billion. Overall, the seed giant beat analyst’s estimates by over 2.8 percent this quarter.
The company feels that corn is the key to their growth in global markets. According to company officials, global demand for corn will be responsible for $1 billion in future sales opportunities. Investors hope that this news of increasing global expansion will keep shares of Monsanto rising into the future. Sales of general vegetable seeds rose 10 percent for the company during the last quarter as well.
Not everyone is enthusiastic about the seed giant, though. Recent and various controversies over GMOs make the company’s future in the United States somewhat uncertain. The war over genetically modified foods could see any number of restrictions placed on seed manufacturers. Making matters worse, companies like Dow Chemical and Syngenta are attempting to offer competing products. All of these factors could cut deeply into Monsanto’s earnings.
The Motley Fool feels that the seed company is worth buying into for the near term, but they note too many uncertainties for long term shareholders. They also point out that corn acreage could decrease as more farmers in the United States plant soybeans instead of corn. The Motley Fool points out that corn is the central way that the company plans to expand globally, and decreased sales at home could hurt that plan. The bottom line is that it is highly possible for the seed giant to downgrade 2014 earnings projections in the near future, which would bring share prices down in a hurry.
For the future, the company is looking into new scientific frontiers. They are trying to move beyond genomics in order to help farmers feed an ever expanding population during this period of climate change. With a forward way of thinking, shares of Monsanto should continue rising as the company works on global expansion. The company’s CEO recently stated, “Our broader portfolio enables us to deliver growth today, while also building the platforms that will help us bring additional value to farmers around the world in the years to come.”
By Luke Sargent