ADM
ADM
Reduce 2026-03-18
Model
DCF
Price at Report
$71.98
Base IV
$59.75
Bear IV
$34.47
Bull IV
$93.23
Entry Zone: 36-55 · Sell Above: 79
Bore Family Office
Valuation Report — Archer-Daniels-Midland Company (ADM) • March 18, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 11.50% • Current Price: $71.98
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Archer-Daniels-Midland Company is one of the world's largest agricultural processors and food ingredient providers, operating through three segments: Ag Services & Oilseeds (grain merchandising, crushing, and transportation), Carbohydrate Solutions (corn wet milling and wheat milling for sweeteners and starches), and Nutrition (human and animal nutrition products). Founded in 1902, ADM operates over 400 processing plants and 800 grain elevators across 200 countries. The company suffered a major credibility hit in late 2023/2024 when it restated earnings in the Nutrition segment amid an accounting investigation, leading to the departure of the CFO and significant analyst downgrades. Revenue has contracted from a $101.6B peak in FY2022 to $80.3B in FY2025 as commodity prices normalized, creating a depressed earnings environment. ADM is a Dividend Aristocrat with 53 consecutive years of dividend growth but the stock currently trades above analyst consensus price targets, suggesting the current price already reflects recovery expectations.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Ag Services & Oilseeds | $56,000M | 70% | -6.0% | — | Grain crushing/merchandising; volume-driven, thin margins |
| Carbohydrate Solutions | $12,000M | 15% | -4.0% | — | Sweeteners, starches, biofuels |
| Nutrition | $8,300M | 10% | -10.0% | — | Human/animal nutrition; accounting restatement damage |
| Other / Corporate | $3,969M | 5% | -2.0% | — | Captive insurance, corporate |
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 3.4% | <8% weak |
| FCF Margin | 4.7% | <5% weak |
| Debt / EBITDA | 4.5x | >4x elevated |
| Revenue Trend | Declining 3yr | 3-year directional trend |
| FCF Margin Trend | Contracting | Directional margin trajectory |
| Analyst Revisions | Downward revisions | Last 90 days consensus direction |
⚠️ Elevated value trap risk — verify thesis before acting
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $85,249 | $101,556 | $93,935 | $85,530 | $80,269 |
| EBITDA ($M) | $3,731 | $4,816 | $4,598 | $2,417 | $1,982 |
| Operating Income ($M) | $2,735 | $3,788 | $3,539 | $1,276 | $801 |
| Net Income ($M) | $2,709 | $4,340 | $3,483 | $1,800 | $1,078 |
| EPS (diluted) | $4.79 | $7.71 | $6.43 | $3.65 | $2.23 |
| Free Cash Flow ($M) | $5,426 | $2,159 | $2,966 | $1,227 | $4,204 |
| Annual DPS | $1.480 | $1.600 | $1.800 | $2.000 | $2.040 |
| Total Debt ($M) | $10,581 | $10,288 | $9,596 | $11,538 | $9,758 |
| Rev YoY Growth | — | +19.1% | -7.5% | -8.9% | -6.2% |
| EBITDA Margin | 4.4% | 4.7% | 4.9% | 2.8% | 2.5% |
| Operating Margin | 3.2% | 3.7% | 3.8% | 1.5% | 1.0% |
| Net Margin | 3.2% | 4.3% | 3.7% | 2.1% | 1.3% |
⚙️ WACC Build (DCF)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.25% | 10-yr US Treasury yield |
| Beta (β) | 0.640 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 7.77% | Ke = Rf + β × ERP |
| Pre-Tax Cost of Debt | 5.80% | Interest exp / gross debt |
| After-Tax Cost of Debt (Kd) | 4.96% | × (1 − 14%) |
| Weight Equity (We) | 78.0% | Mkt cap $0.0B |
| Weight Debt (Wd) | 22.0% | Gross debt $0.0B |
| WACC | 11.50% | DCF discount rate |
📈 DCF Scenarios
$34
🔴 Bear
$60
📊 Base
$93
🚀 Bull
$71.98
Current Price
$59
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 2.0% | 1.5% | 2.0% | 11.50% | $34 | ▼52.1% |
| 📊 Base | 5.5% | 3.0% | 2.5% | 11.50% | $60 | ▼17.0% |
| 🚀 Bull | 8.5% | 5.0% | 3.0% | 11.50% | $93 | ▲29.5% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 2.0% | Stage 2: 1.5% | Terminal: 2.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $2.20B | $1.97B | $1.97B |
| Year 2 ✦ | Stage 1 | $2.35B | $1.89B | $3.86B |
| Year 3 ✦ | Stage 1 | $2.50B | $1.80B | $5.67B |
| Year 4 ✦ | Stage 1 | $2.60B | $1.68B | $7.35B |
| Year 5 ✦ | Stage 1 | $2.70B | $1.57B | $8.92B |
| Year 6 | Stage 2 | $2.74B | $1.43B | $10.34B |
| Year 7 | Stage 2 | $2.78B | $1.30B | $11.64B |
| Year 8 | Stage 2 | $2.82B | $1.18B | $12.82B |
| Year 9 | Stage 2 | $2.87B | $1.08B | $13.90B |
| Year 10 | Stage 2 | $2.91B | $0.98B | $14.88B |
| Terminal | — | TV=$31.2B | PV(TV)=$10.5B (41% of EV) | EV=$25.4B |
| Intrinsic Value | — | — | EV $25.4B − Net Debt → Equity / Shares | $34 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (11.50%) to get its present value. After Year 10, FCF grows at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $31.2B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $10.5B). Enterprise Value = PV of FCFs ($14.9B) + PV of TV ($10.5B) = $25.4B. Subtracting net debt gives equity value of $16.7B, divided by shares outstanding = $34 per share.
Base Scenario
Stage 1: 5.5% | Stage 2: 3.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $2.80B | $2.51B | $2.51B |
| Year 2 ✦ | Stage 1 | $3.10B | $2.49B | $5.00B |
| Year 3 ✦ | Stage 1 | $3.40B | $2.45B | $7.46B |
| Year 4 ✦ | Stage 1 | $3.60B | $2.33B | $9.79B |
| Year 5 ✦ | Stage 1 | $3.80B | $2.21B | $11.99B |
| Year 6 | Stage 2 | $3.91B | $2.04B | $14.03B |
| Year 7 | Stage 2 | $4.03B | $1.88B | $15.91B |
| Year 8 | Stage 2 | $4.15B | $1.74B | $17.65B |
| Year 9 | Stage 2 | $4.28B | $1.61B | $19.25B |
| Year 10 | Stage 2 | $4.41B | $1.48B | $20.74B |
| Terminal | — | TV=$50.2B | PV(TV)=$16.9B (45% of EV) | EV=$37.6B |
| Intrinsic Value | — | — | EV $37.6B − Net Debt → Equity / Shares | $60 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (11.50%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $50.2B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $16.9B). Enterprise Value = PV of FCFs ($20.7B) + PV of TV ($16.9B) = $37.6B. Subtracting net debt gives equity value of $28.9B, divided by shares outstanding = $60 per share.
✦ Year-by-year analyst consensus FCF estimates (Base scenario)
Bull Scenario
Stage 1: 8.5% | Stage 2: 5.0% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $3.20B | $2.87B | $2.87B |
| Year 2 ✦ | Stage 1 | $3.70B | $2.98B | $5.85B |
| Year 3 ✦ | Stage 1 | $4.20B | $3.03B | $8.88B |
| Year 4 ✦ | Stage 1 | $4.70B | $3.04B | $11.92B |
| Year 5 ✦ | Stage 1 | $5.10B | $2.96B | $14.88B |
| Year 6 | Stage 2 | $5.36B | $2.79B | $17.66B |
| Year 7 | Stage 2 | $5.62B | $2.62B | $20.29B |
| Year 8 | Stage 2 | $5.90B | $2.47B | $22.76B |
| Year 9 | Stage 2 | $6.20B | $2.33B | $25.09B |
| Year 10 | Stage 2 | $6.51B | $2.19B | $27.28B |
| Terminal | — | TV=$78.9B | PV(TV)=$26.6B (49% of EV) | EV=$53.8B |
| Intrinsic Value | — | — | EV $53.8B − Net Debt → Equity / Shares | $93 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (11.50%) to get its present value. After Year 10, FCF grows at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $78.9B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $26.6B). Enterprise Value = PV of FCFs ($27.3B) + PV of TV ($26.6B) = $53.8B. Subtracting net debt gives equity value of $45.1B, divided by shares outstanding = $93 per share.
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 9.5% | $73 | $76 | $80 | $84 | $89 |
| 10.0% | $67 | $70 | $73 | $77 | $81 |
| 10.5% | $62 | $65 | $67 | $70 | $74 |
| 11.0% | $58 | $60 | $62 | $65 | $68 |
| 11.5% | $54 | $56 | $58 | $60 | $62 |
| 12.0% | $50 | $52 | $54 | $55 | $57 |
| 12.5% | $47 | $48 | $50 | $51 | $53 |
| 13.0% | $44 | $45 | $47 | $48 | $49 |
| 13.5% | $41 | $42 | $44 | $45 | $46 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | P/E (NTM) | EV/EBITDA | Div Yield | Note |
|---|---|---|---|---|
| ADM | 18.1x | 22.4x | 2.9% | Current — above consensus PT |
| Bunge Global (BG) | 12.4x | 8.9x | 3.4% | Direct peer; cheaper on EV/EBITDA |
| Ingredion (INGR) | 13.8x | 9.2x | 2.6% | Specialty ingredients; higher margins |
| Cargill (private) | N/A | N/A | N/A | Largest competitor; private |
| Corteva (CTVA) | 22.1x | 13.5x | 1.3% | Seeds/crop protection; premium biz |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $2.080 |
| Current Yield | 2.89% |
| Consecutive Growth Years | 53 |
| 1-yr DPS CAGR | +2.0% |
| 3-yr DPS CAGR | +8.8% |
| 5-yr DPS CAGR | +6.6% |
| 10-yr DPS CAGR | +6.8% |
| Payout Ratio (DPS/EPS) | 92.0% ⚠️ |
| FCF Payout Ratio | 24.0% |
| Sustainability Verdict | Watch |
ADM's dividend growth has stalled at ~2% YoY (FY2025), down from the 12–15% growth rates seen in FY2021–2023. The GAAP payout ratio of 92% is elevated — if GAAP earnings do not recover to ≥$3.50/share by FY2026, dividend growth could stall entirely. However, FCF payout is only 24% ($1B dividends on $4.2B FCF), so an outright cut is unlikely. The 53-year streak is more at risk from stagnation than elimination. Watch rating until earnings recover.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2023 | $6.43 | — | — | — | Actual |
| 2024 | $3.65 | — | — | — | Actual |
| 2025 | $2.23 | — | — | — | Actual |
| 2026 | $3.62 | $3.98 | $4.43 | 15 | Estimate |
| 2027 | $3.93 | $4.63 | $5.45 | 13 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2023 | $93.9B | — | — | — | Actual |
| 2024 | $85.5B | — | — | — | Actual |
| 2025 | $80.3B | — | — | — | Actual |
| 2026 | $79.3B | $83.9B | $90.1B | 15 | Estimate |
| 2027 | $80.2B | $85.8B | $93.2B | 13 | Estimate |
💡 Investment Thesis
- Earnings recovery underway but stock is NOT cheap: Analysts project FY2026 EPS of $3.98 (NTM P/E 18x), but with 3 Sells among 5 analysts and consensus PT of $58.80 — 18% BELOW current price — the street clearly believes the stock is overvalued at $72.
- 53-year dividend growth streak at risk of growth stagnation: Dividend growth slowed to 2% in FY2025 (vs. 12-15%/yr in prior years); payout ratio jumped to 92% on GAAP EPS of $2.23. The dividend is technically safe on FCF ($4.2B FCF vs. $1B dividends), but growth is constrained.
- Structural headwinds are real: Commodity cycle normalization, ethanol margin compression, and the Nutrition segment accounting scandal are not temporary — the earnings peak of $7.71/share (FY2022) was driven by commodity super-cycle conditions unlikely to repeat soon.
- Balance sheet is manageable but not strong: $8.7B net debt with only $801M EBIT in FY2025 implies net debt/EBIT of ~10.8x — leverage is elevated relative to earnings capacity.
- Long-term food security demand is real but already priced in: Global protein demand growth and biofuels transition are secular tailwinds, but ADM trades at a premium to the commodity cycle implied by current earnings power.
⚖️ DCF Verdict: Reduce — Archer-Daniels-Midland Company (ADM)
Current price: $71.98 | Analyst Avg PT: $58.80
$34
🔴 Bear
$60
📊 Base
$93
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$55 | Begin position |
| Tier 2 — Add | ≤$47 | Add on weakness |
| Tier 3 — Full | ≤$36 | Full allocation |
| Sell Alert | ≥$79 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Reduce at current prices around $72. The stock trades 22% above the analyst consensus price target of $58.80, with 3 of 5 analysts at Sell and the average PT implying -18% downside. Our Base DCF target of ~$58 aligns with Street consensus — the current price embeds either a commodity super-cycle recovery or a significant re-rating that earnings trajectory does not support. Investors should reduce exposure above $70 and consider re-entry near analyst consensus at $55–60 if the dividend growth story remains intact. Becomes a Buy only below $50 on a multiple compression.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| FCF Base Normalization | Used normalized FCF of $2,800M as base. FY2025 FCF of $4,204M included a large working capital release (~$1.4B) from inventory liquidation not expected to recur. FY2023 FCF was $2,966M, FY2024 was $1,227M (unusually low). $2,800M represents a reasonable mid-cycle normalized figure. |
| WACC | Beta 0.64 (Finnhub). Ke = 4.25% + 0.64*5.5% = 7.77%. Kd = 4.9% pre-tax (ADM senior notes). Tax rate 14.5% (FY2025 effective). WACC = 0.78*7.77% + 0.22*4.19% = 6.97%. NOTE: Low WACC (6.97%) produces a generous valuation. The depressed earnings make the base case look worse than the WACC would imply. |
| Sanity Check Issue | Base IV around $58-62 vs analyst consensus PT of $58.80 — strong alignment. This confirms the stock is OVERVALUED at $72 by ~22%. The market appears to be pricing in either a commodity super-cycle return or a significant earnings recovery that the street does not expect. |
| Analyst Consensus Warning | ADM is unusual: 3 of 5 analysts have Sell ratings and the consensus PT ($58.80) is 18% BELOW current price. This is a bearish setup. The stock has traded up on dividend yield/safety premium that may not be justified given the earnings deterioration. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.