Archer-Daniels-Midland: Policy Wins Don't Fix This Dividend King's Valuation

IWA Research2.44K FollowersFollow5ShareSavePlay(11min)CommentsSummaryArcher-Daniels-Midland remains a Hold, as current valuation lacks a margin of safety amid macro headwinds.ADM's adjusted FCF of ~$1.44 billion is underwhelming versus its $32.35 billion market cap given the industry they play in, with dividend growth outpacing fundamentals before and now slowing down.Cost savings of $500–$750 million over 3–5 years and diversification efforts are positive, but investment levels remain insufficient to support better returns.Intrinsic value is estimated below the current level, making the risk-reward unattractive at present prices. fcafotodigital/iStock via Getty Images Introduction The last time I covered Archer-Daniels-Midland (ADM), I reiterated their Hold rating, highlighting how the investment came with “Too Much Policy Risk For A Low-Margin Dividend King.” Despite some improvements regarding trade and biofuelThis article was written byIWA Research2.44K FollowersFollowI've been researching companies in-depth for over a decade, from commodities like oil, natural gas, gold and copper to tech like Google or Nokia and many emerging market stocks, which I believe could help me provide useful content for readers. After writing my own blog for about 3 years, I decided to switch to a value investing-focused YouTube channel, where I researched hundreds of different companies so far. I would say my favorite type of company to cover are metals and mining stocks, but I am comfortable with several other industries, such as consumer discretionary/staples, REITs and utilities.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.