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Msg  109 of 120  at  2/2/2023 5:14:59 AM  by

jerrykrause


Corteva's 2023 Outlook: Ag Remains on a Roll

 

Corteva's 2023 Outlook: Ag Remains on a Roll

 
 

The 2023 outlook for farming is solid, even after a pretty incredible 2022.

Crop chemical and seed provider Corteva (ticker: CTVA) reported fourth-quarter numbers Wednesday evening. The company lost 6 cents a share from $3.8 billion in sales. Wall Street was looking for earnings per share of 6 cents from $3.8 billion in sales. In the fourth quarter of 2021, Corteva reported earnings of 8 cents a share and $3.5 billion in sales.

It's an earnings miss, but fourth-quarter numbers aren't all that big a deal for Corteva. Farming is a seasonal business and farmers aren't buying a lot of seeds and chemicals now.

For the full year, earnings before interest, taxes, depreciation and amortization, or Ebitda, came in at $3.2 billion, up 25% year over year and inline with Street estimates.

What matters more that Q4 results is 2023 guidance. For the coming year, Corteva expects to earn about $2.80 a share and generate $3.5 billion in Ebitda from about $18.3 billion in sales.

Wall Street is projecting earnings per share of $3.16 and Ebitda of $2.5 billion from $18.5 billion in sales.

Earnings and sales look light, but not included in guidance is results expected from Stoller, the biologics company purchased by Corteva in November . That deal is expected to close in the first half of 2022.

Stoller should generate roughly $400 million in sales and $100 million in Ebitda this year. That will be added to guidance, prorated for the time of year when Stoller is officially in the Corteva fold.

Overall, things look roughly like they should for Corteva. Earnings are expected to grow and the company still expects to generate about $4.4 billion in Ebita by 2025 , with Ebitda margins in the 21% to 23% range. Corteva's Ebitda margin in 2022 came in at about 18%.

Shares are down about 1.7% in afterhours trading Wednesday. The stock is also starting from a position of strength. Shares have gained about 36% over the past 12 months.

Options markets imply the stock will move about 5%, up or down, in Thursday trading. The stock has moved closer to 2%, up or down, following the previous four quarterly reports. The stock has risen twice and fallen twice over that span.

Management hosts an earnings conference call on Thursday morning at 9 a.m. Eastern time to discuss results.

Through Wednesday trading, Corteva stock was up about 10% year to date. The S&P 500 and Dow Jones Industrial Average were up about 6% and 1%, respectively.

Shares trade for roughly 21 times estimated 2023 earnings per share. That's in line with the average PE ratio over the past few years.

 


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