Is Archer-Daniels-Midland Company (ADM) overvalued?
On Equity Rank's model estimate, ADM trades 24% above its fair value. Archer-Daniels-Midland Company (ADM) last closed at $69.97; the multi-method model fair value is $56.54.
| Price | Model fair value | Price vs model |
|---|---|---|
| $69.97 | $56.54 | 24% above |
What the answer rests on
- 3 of 11 valuation methods put ADM's value above its price and 8 put it below, so the methods disagree.
- To justify today's price, ADM's free cash flow would need to grow about -8.8% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 24.9% a year.
- ADM trades at 13.8 times its last year's earnings, against a median of 20.2 for 8 profitable Protein Processing companies.
- Over the past year the price sat below the model fair value on 31% of trading days. The gap ranged from 22% below to 64% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind ADM's fair value · What prices assume · Other companies