Monsanto Posts New 52-week Low on Weak Report

The hits just keep on coming for Monsanto Corp. (NYSE:MON). The company today reported third fiscal quarter EPS of $0.81 on revenue of $2.96 billion. EPS estimates had been $0.80 and revenues were expected to reach $3.17 billion. EPS for the quarter was less than half that of the previous quarter, $1.70/share. Monsanto’s share price has taken a hit already this morning of about 3%.

Other fertilizer companies, including Mosaic Co. (NYSE:MOS), Potash Corp. of Saskatchewan, Inc. (NYSE:POT) and Syngenta AG (NYSE:SYT) are trading up this morning, as is the Market Vectors Agribusiness ETF (NYSE:MOO). Mosaic is up more than 2.5%, while the others are up less than 1%.

Monsanto’s results for last quarter indicated that this might happen, and then later the company announced a change in its strategy for selling its Roundup weed-killer and all the dire predictions got worse. Monsanto is reducing is portfolio of Roundup products and lowering the weed-killer’s price to a lever that is closer to generic competitor products. This translates in lower sales and less profits for a long time to come.

In today’s report the company said it had negative free cash flow of -$1.15 billion for the first nine months of the year. It forecast 2010 free cash flow of $400-$500 million, about half its original forecast of $900 million-$1 billion. Full-year EPS is forecast at $2.40-$2.60. Just a few months ago, Monsanto forecast EPS of $3.10-$3.30.

Monsanto plans to expand sales in its seeds and genomic segment, where sales are growing and margins are still over 50%. Sales of the company’s genetically modified seeds are particularly strong in corn and soybeans

For the company’s fourth fiscal quarter, the company is forecasting EPS of -$0.09 to $0.11. Consensus estimates from analysts are EPS of $0.03. The only good bit of news here is that Monsanto has finally grasped the idea that Roundup will not save the company.

Monsanto shares have set a new 52-week low of $45.83 this morning. If that doesn’t happen again soon, that’s the best the company could hope for.

Paul Ausick