Monsanto
- Submitted by: nthieu
- Views: 241
- Category: Politics: Economics
- Date Submitted: 01/28/2015 08:35 PM
- Pages: 12
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Monsanto (MON) | Investment Recommendation: HOLD |
Analyst: Kurt Becker | Current Price: $74.21 |
Graph 1: Historical Prices collected from Yahoo.com
Key Index Statistics | |
52 Week Range | $66.57- $93.35 |
Market Capitalization | 40.49 (B) |
Shares Outstanding | 546 (M) |
Beta | 0.7 |
Price/Book | 4.07 |
Price/Sales | 3.89 |
ROA(ttm) | 10.5% |
ROE(ttm) | 15.78% |
EPS | $2.78 |
Net Income | 2.1B |
Trailing P/E | 26.71 |
Forward P/E | 16.71 |
Investment Thesis
We currently have 225 shares of Monsanto, representing 1.65% of our portfolio, and I recommend we HOLD at that amount. Using the Discounted FCF valuation model I derived an intrinsic value of $82.09 which indicates MON is fairly valued. Monsanto continues to dominate a market that it essentially created more than a decade ago. Through its ongoing commitment to research and development and assertive capital allocation, the company has positioned itself to grow and remain dominant for years to come. The company has good growth potential over the long term, particularly in countries like India, China, and Brazil, where the population is increasing and agricultural production methods need to be updated. Monsanto is well established in developing countries where most of the future growth in this industry will come from, and this gives them an edge over its competitors.
Economic factors will help Monsanto this planting season as crude oil prices remain low and fertilizer prices are at all time lows. The USDA predicts an increase in amount of crops planted thus giving Monsanto more revenue. Because of the importance of crop yields farmers will be looking for the best product to maximize their yields. This is where Monsanto focuses and benefits most. A slightly down harvest last year will provide Monsanto a perfect opportunity to market their new state of the art products. They expect to see a lot of sales growth in this area.
The company has to create a more positive...
Analyst: Kurt Becker | Current Price: $74.21 |
Graph 1: Historical Prices collected from Yahoo.com
Key Index Statistics | |
52 Week Range | $66.57- $93.35 |
Market Capitalization | 40.49 (B) |
Shares Outstanding | 546 (M) |
Beta | 0.7 |
Price/Book | 4.07 |
Price/Sales | 3.89 |
ROA(ttm) | 10.5% |
ROE(ttm) | 15.78% |
EPS | $2.78 |
Net Income | 2.1B |
Trailing P/E | 26.71 |
Forward P/E | 16.71 |
Investment Thesis
We currently have 225 shares of Monsanto, representing 1.65% of our portfolio, and I recommend we HOLD at that amount. Using the Discounted FCF valuation model I derived an intrinsic value of $82.09 which indicates MON is fairly valued. Monsanto continues to dominate a market that it essentially created more than a decade ago. Through its ongoing commitment to research and development and assertive capital allocation, the company has positioned itself to grow and remain dominant for years to come. The company has good growth potential over the long term, particularly in countries like India, China, and Brazil, where the population is increasing and agricultural production methods need to be updated. Monsanto is well established in developing countries where most of the future growth in this industry will come from, and this gives them an edge over its competitors.
Economic factors will help Monsanto this planting season as crude oil prices remain low and fertilizer prices are at all time lows. The USDA predicts an increase in amount of crops planted thus giving Monsanto more revenue. Because of the importance of crop yields farmers will be looking for the best product to maximize their yields. This is where Monsanto focuses and benefits most. A slightly down harvest last year will provide Monsanto a perfect opportunity to market their new state of the art products. They expect to see a lot of sales growth in this area.
The company has to create a more positive...