Archer Daniels Midland Company (NYSE:ADM) up on profits, down on revenue

Archer Daniels Midland Company (NYSE:ADM) unveiled its third quarter earnings before market instigated on Tuesday. Archer Daniels Midland Company (NYSE:ADM) made $0.81 earnings per share on top of revenue of $18.12 billion. Earnings per share were 0.47 last year in the same period, while the revenue was $21.39 billion. The expected estimate was $0.73 on $21.19 billion revenue.

These figures did not propose guidance, but according to the analysts estimate, the fourth quarter earnings will have an EPS of 0.94 dollars on top of $24.34 billion revenue. Annual revenue is expected at $3.01 EPS on revenue of $88.16 billion.

These figures may seem promising, however, there are factors that have become a cause of concern for Archer Daniels Midland Company (NYSE:ADM). The company profits are rising, while its revenues are receding with each quarter. This pattern has continued for the past 3 quarters. Out of the three segments, revenues dropped down in just about each one. Oilseeds stumbled down by 1.36 billion, corn processing dropped down by 497 million, while agricultural services went down to a meagre 1.47 billion. As for the profits, there hasn’t been a steady trend in the aforementioned segments. Oilseeds division didn’t yield much profit, and corn processing extracted profit worth $356 million, while the agricultural service yield was $57 million.

Ethanol operation witnessed an increase in its profits, and went up from a meagre $113 million to $185 million. Sweeteners and starches profits went up to $171 million. The profits are riding on these two items; Archer Daniels Midland Company (NYSE:ADM) will be hoping that these profits continue to pile up.

The company’s CEO said that the executives are happy with how the third quarter has turned out. There were some significant developments, which are being seen as a good sign for future ventures. As far as investors are concerned, the waning revenue figures might cause a little uncertainty. However, this reaction should not come as a surprise, and with time all issues will be put to rest, as per the company’s CEO. Archer Daniels Midland Company (NYSE:ADM) expanded its portfolio management and sold off its global chocolate business. In addition, Archer Daniels Midland Company (NYSE:ADM) has recently acquired WILD Flavors.

Archer Daniels Midland Company (NYSE:ADM) shares were low on Tuesday’s premarket, and closed at $47.20. The expected price was around $52.36, and better figures are not a distant dream, provided the company handles revenue issues sooner. Archer Daniels Midland Company (NYSE:ADM) bought back 18 million common stock shares, and plans to buy another 10 million by the end of this year.

Archer Daniels Midland Company (NYSE:ADM) has a lesson to learn from the third quarter earnings. The increasing trends in profits are no good to a company, if they are unable to have a positive effect on the overall revenue. The company will have to deal with this inverse relation of its profits with its revenue. Such developments make investors nervous. If this trend continues, investors get anxious, and start dumping the stock cheaply.