By Rob Otman
Monsanto (NYSE: MON) is a large cap company that operates within the chemicals industry. Its market cap is $52 billion today, and the total one-year return is 11.29% for shareholders.
Monsanto stock is underperforming the market. It’s beaten down, but it reports earnings next week. So is it a good time to buy? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: Monsanto reported a recent EPS growth rate of 28.51%. That’s below the chemicals industry average of 52.47%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the chemicals industry is 21.73. And Monsanto’s ratio comes in at 20.87. It’s trading at a better value than many of its competitors.
✗ Debt-to-Equity: The debt-to-equity ratio for Monsanto stock is 165.12%. That’s above the chemicals industry average of 59.46%. That’s not a good sign. Monsanto’s debt levels should be lower.
✗ Free Cash Flow per Share Growth: Monsanto’s FCF has been lower than that of its competitors over the last year. That’s not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✓ Profit Margins: The profit margin of Monsanto comes in at 26.96% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Monsanto’s profit margin is above the chemicals average of 12.84%. So that’s a positive indicator for investors.
✓ Return on Equity: Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for Monsanto is 39.68%, and that’s above its industry average ROE of 24.32%.
Monsanto stock passes three of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Hold.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
If you’re interested in finding Strong Buy stocks yourself, check out Fundamental Analysis Pro. It’s a free five-part mini-course that will teach you how to grade stocks like a Wall Street veteran. Click here to learn more. …read more
Source:: Investment You
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