ADM: Margin Recovery and Self-Help Catalysts Signal Strong 2026 Rebound

We initiate on ADM at Buy, $66 PT. Archer-Daniels-Midland Company (NYSE: ADM) is a global processor and distributor of agricultural commodities and a supplier of ingredients and nutrition solutions for the food, feed, and industrial markets worldwide.

Behind its mature industry veneer, ADM has quietly laid the groundwork for the next leg of its growth story, pairing capacity investments with disciplined cost-out. Consensus expectations for 2025 overlook the drag from lower insurance recoveries and still-historically suppressed crush margins, but management's cost-out execution and Decatur-East ramp offer meaningful offsets, justifying near-term conservatism.

We model FY25E EPS of $3.90, 2.5% below the street, as crop cycle and margin normalization remain out of reach, but see inflection in FY26E with secular tailwinds (RVO policy clarity) and full-year operational leverage driving crush margins back to mid-cycle range and diluted EPS to $4.70, modestly ahead of consensus.

We apply a forward P/E of 14x, underpinned by ADM's historical median and using the growth re-acceleration as a justification for the multiple expansion. Our PT is based on the normalization of operations, with consideration given to the cautious approach to execution risk as evidenced by recent insider sales.

We view near-term volatility around cadence and margins as a risk, but valuation already incorporates this risk by trading at a discount to its historical average and global peers. With asymmetric R/R skewed toward expanding profits and a durable runway to earnings normalization, we see potential for outsized returns as the story shifts from recovery to growth.